Government policies must be guided by weak state of economy -IFS

Accra: The Institute of Fiscal Studies (IFS) says the Ghanaian economy remains weak despite recorded growth rates.It has, therefore, urged the government to ensure that it did not introduce or implement economic policies in an election year that would erode the efforts of reviving the economy.'This requires it to choose prudence over populism even as it campaigns for power in this year's elections. Thus, politicisation of economic policy decisions and choices must stop.'All the relevant macroeconomic indicators are still presently performing much below par relative to recent historical trends. The government should not, therefore, behave as if all is well. Rather, the fragile state of the economy should be made to inform its policy choices,' said Dr Said Boakye, Senior Research Fellow at the IFS during a press briefing on the Mid-year Budget.Outlining a policy brief of the Institute, he said it was important for Ghanaians to understand that the current fiscal improvements recorded since 2023 were temp orary and would be attributed to the reduced debt service expenditure resulting from domestic and international debt restructuring programmes.He, therefore, urged the government to take advantage of the window by implementing measures to tackle the negative fiscal fundamentals for improvement in fiscal performance on a long-term basis.He mentioned the negative fiscal fundamentals to include low revenue generation, excessive fiscal rigidities, corruption, and politically induced spending decisions.'The government must focus more on plugging revenue gaps by closing revenue leakages and improving collection. Thus, the government should not subject the fragile economy to more taxes,' he said.IFS has among other things cast doubt over government's ability to raise over GHS177.2 billion to meet the upwardly revised mid-year revenue target of 17.4 per cent of Gross Domestic Product (GDP) and also raised concerns over the heightened domestic financing of the national budget due to the country's inability to a ccess the Eurobond market.Source: Ghana News Agency