Finance Minister, Ken Ofori-Atta
Two influential think-tanks have said Ghana’s ambitious post-COVID economic recovery programme could be held back as the government struggles to substantially improve its revenue.
The government missed its half-year revenue target by GH¢4.1bn, as it collected GH¢28.3bn against a target of GH¢32.4bn, Finance Minister Ken Ofori-Atta disclosed during his mid-year budget review last week.
The government is targeting GH¢72.5bn in revenue from all sources in 2021.
While the economy is recovering from its steepest decline in 37 years in 2020, a full rebound would require strong revenue growth to fund government’s recovery programme, the Institute of Statistical, Social and Economic Research (ISSER) and the Institute of Economic Affairs (IEA) said during separate press briefings in Accra.
The head of ISSER, Prof. Peter Quartey, said the weak revenue performance threatens the successful implementation of the Ghana CARES Obaatampa programme, a GH¢100 billion initiative to revitalise the COVID-19 hit economy.
The economist raised questions about the availability of funds to drive the ambitious programme, which seeks to raise 70 percent of its financing from the private sector.
“It’s certainly going to be a struggle because government is not meeting the revenue target. The private sector is also struggling,” he said.
At its press briefing, the IEA said Ghana’s recovery may be prolonged if government fails to mobilise more revenue to invest in critical sectors of the economy.
According to the IEA, the economy still faces the daunting task of responding to the health crisis and economic impact of the pandemic.
While urging the government to widen the tax net to improve revenue performance, the think-tank wants loopholes in the tax system plugged to help improve revenue performance.
“We should be increasing our efforts to raise more revenue to restore the economy,” IEA’s Director of Research Dr. John K. Kwakye said.
“We lose billions of dollars through tax evasion, exemptions, illicit financial flows, inefficiencies in tax administration, and the large informal sector outside the tax net,” he added.
He said plugging the loopholes could add over 10 percent of GDP to Ghana’s tax revenue collection.
The government, meanwhile, is confident of significantly increasing its revenue over the medium term as it says it is digitising the country’s tax administration and implementing an array of other measures to enhance revenue collection