IFS warns government of domestic budget financing

The Institute for Fiscal Studies (IFS) has predicted that Ghana's economic troubles would worsen if it continues to finance the national budget domestically. 

According to IFS, the government's inability to access the Eurobond market has resulted in fierce competition with the private sector for loans to support the budget, a trend that is expected to lead to a shortage of investible money for the latter.

Dr. Said Boakye, Acting Executive Director of the IFS, spoke at a press briefing on an evaluation of Ghana's current fiscal and macroeconomic performance. He urged for resilient measures to drive economic growth.

“The heightened domestic financing of the national budget that is currently taking place due to the country’s inability to access the Eurobond market owing to the death crisis is a cause for concern. The reason is that by this, the government is more aggressively competing with the domestic private sector for loanable funds,” he noted.

This is likely to lead to a shortage of investible funds for the private sector and thus sustain a high interest rate, both of which have the effect of prolonging the current low economic growth and elevated unemployment rates.

“This calls for deliberate measures to tackle negative physical fundamentals like low revenue generation, excessive fiscal rigidities, corruption, and political-induced decisions. ”

Source : Lead News Online