Professor Stephen Adei, a former Chairman of the Ghana Revenue Authority has urged the government to reduce its expenditure in order to save the economy.
According to him, the only way to salvage the economy which is facing some challenges is through a reduction in the earnings of government appointees and other Article 71 officeholders.
Prof Adei told Joy News in an interview that a reduction in expenditure will help the government to mobilise funds and address some pertinent issues in the country.
He explained, “Why should a country like Ghana have about four or five ministries of transport? … It’s incredible. In other countries, we have one minister, and then we have technical heads of these institutions. So we can reduce the size of government … Actually, under this circumstance, I think that the executive and other things must have a pay cut; maybe 25% will do.
“If the government does not consider a reduction in some of its expenditure, the economy may experience a further decline; which could lead to a worsening of the current situation.”
To Prof Adei, “if you are exceeding your income, then you must accept to live below your income, which is the easy way, otherwise, if you are earning GHC3,000 and you are in debt of GHC10,000 you cannot day to day spend GHC3,000. For you to get out of the rag you will have to cut your expenditure to GHC2,000 because you must service your debt. So we are in that situation as a country.
“…And they [government] must thank God that this crisis has come now and not 2023, because if they don’t go for the hard one now, which normally will take about 18 months to go over this type of hunch, then they have a good chance by the middle of 2023 to see some good results in 2024. If not, things would get worse and if they want to prevent being thrown out of government, they would be thrown out anyway.
The government of Ghana in January 2022 announced a 20 percent suspension of its expenditure in the 2022 Budget.
Explaining to the media Ken Ofori-Atta, the Finance Minister said, “to ensure that the government matches all expenditure to revenue inflows, all expenditure commitments in 2022 will be adjusted to match revenue collection,” the Finance Minister announced.
“Therefore, in accordance with Section 25 of the Public Financial Management Act (PFMA) law, the quarterly expenditure ceilings of the approved budget will include up to a 20% downward adjustment, beginning in the first quarter of 2022, in commitments across board for all covered entities benefiting from the 2022 Budget, subject to revenue performance.”