Domestic resource mobilisation and rationalisation of expenditure are key to reducing the impact of the global financial crisis on Ghana, Dr Anthony Akoto Osei, Minister of State at the Finance Ministry, said yesterday.
Speaking at a roundtable on the 'Impact of the Global Financial Crisis on Ghana,' Dr Osei said robust collection of revenue and putting a lid on non-essential expenditure must help to mitigate the impact of the crisis.
The discussion is the first in a series of annual lectures to be held in honour of the late Mr Kwadwo Baah-Wiredu's contribution to the development of economic and financial journalism in the country.
The global crisis that began in September this year in the US have swept across various regions with developing countries expected to bear the brunt of the effects.
There are fears that with the credit crunch and weaker growth, government in developing countries will have less money to spend on essential services such as health and education.
Ghana, for instance, has a sizeable account deficit which it has in part funded through foreign borrowing, including a recent Eurobond issue.
However, Dr Osei said, with the credit crunch, resource mobilisation from the external capital markets, is likely to be difficult whilst domestic borrowing might in the long-run reverse the gains made in the economy and hurt the development of the private sector.
Dr Osei said while donors will continue to fulfil their commitments to the country, the onus is on government to maintain fiscal discipline and adopt innovative means to shore up revenue mobilisation from domestic sources.
The Country Director of the World Bank, Mr Ishac Diwan said the immediate impact of the crisis will be a fall in the prices of primary commodities, which incomes are essential to the budget of most developing countries.
This, he said, will entail that developing countries need to borrow more money to be able to stimulate domestic consumption and public spending.
Mr Diwan said foreign investment, banks borrowing from abroad and expansion of agriculture will be difficult because of the financial global crisis.
Mr Arnold McIntyre, Resident Representatives of International Monetary Fund, said rationalisation of expenditure in the areas of growth and poverty will be essential