Finance Minister Justifies Borrowing In 2019

Fresh rounds of borrowing in 2019 would not result in Ghana being classified as a debt distress country, Finance Minister Ken Ofori-Atta has assured.

The government in the 2019 budget presentation made its intentions to borrow in excess of $5 billion to undertake infrastructural projects – a situation many fear could lead the country into distress.

But speaking to JoyBusiness at the KPMG 2019 Budget Forum, Ken Ofori-Attah said measures have been put in place to ensure prudent borrowing.

“I think we are fine because we keep working on sort of liability management to make sure that we move from the short end to the longer end and further borrowings would have to look at the three issues of cost, capital, the sustainability as you’re talking about and making sure that the projects are productive and profitable in the long run,” he said.

Mr Ofori-Atta added, “It’s really always a balancing arch; if we look at accumulation over the period, you can see a positive primary balance which means that we are borrowing less than we know what we have to pay so I think it’s moved down from our 47 per cent accumulation from 2012 to where we are now at 16 and 18 per cent so we are watching that very keenly to make sure that we don’t get into debt distress.”

Fiscal council
Earlier, the government indicated plans to establish an independent Fiscal Council to oversee the implementation of fiscal policy. In response to the state of the plan, Mr Ofori-Atta said progress has been made so far to send the bill to parliament before the end of 2018.

“We are drafting the bill right now and so we hope that by the year end we’ll have that pass through parliament and then set it up for next year,” he said.

The government has announced that it will soon pass a fiscal responsibility law to ensure fiscal discipline in government expenditure and safeguard the public purse. It is for this reason that the Fiscal Council has become necessary.

New income tax
On his part, Tax Policy Analyst and Consultant, Abdallah Ali-Nakyea, who was one of the panellists at the forum is advocating a review of the new income tax rate.

He believes the new rate of 30% on incomes of GHs20,000 and above should be reduced to 25% on the basis that individuals cannot be paying the same rate as companies.

“I think that in taxation, that is not fairness; they can reduce it to 25, change the tax band and then we adjust the income bands and still achieve what government wants to achieve within that bracket,” he said.

Some other panellists at the forum were Dr John Kwakye an Economist and Member of the Monetary Policy Committee, Mr Humphrey Ayim-Darko-Vice President of AGI (SMEs), Andy Akoto-Partner of KPMG and the Forum Host, Amanor Dodoo.

The KPMG 2019 Budget Forum was on the theme, “A strong economy for jobs and prosperity.”