Policy think tank, IMANI Ghana Tuesday urged the government to seal all major revenue loopholes to get the economy back to work.
A statement released here signed by its president, Franklin Cudjoe titled, “IMANI Quarterly Brief on 2017 Budget Performance” says the performance on revenue particularly on domestic tax revenue for the first quarter raises concerns within the short term and is consistent with fears of many observers of the economy.
The think tank warns that without a significant recovery of real sector productivity to drive the tax revenue over the next three quarters beyond the government’s projections, efficiency and effectiveness of the 2017 economic plan could be undermined, with debilitating effects on other macro-economic aggregates.
The country’s currency has lost 5.86 percent of its value against the United States Dollar (USD) for the quarter, despite macro prudential strategies implemented to manage it.
The non-responsiveness of credit costs over the quarter despite indications of a decline in prices with a corresponding monetary policy response, IMANI Ghana observes is indicative of structural risks within the economy which will be resolved not only by macro-prudential policies.
“There is more to be done, for the economy to get back to work, and create the sustainable jobs, through the budget and economic management plan without further pressures being exerted on the various economic players. One major and immediate remedy will be for the government to close all the major revenue loopholes, especially those within our ports, which have been assessed to account for only 10 percent of their potential accrual,” the statement said.
The expectation of the government as outlined in the 2017 budget statement and economic policy for 2017 is a projected growth in revenue of about 33 percent. The projected annual revenue stands at GHS44.96 billion.
Revenue targets IMANI Ghana says have been missed for the first quarter by 14 percent, of which domestic revenue fell short of the target by 12 percent. Company taxes, a component of the domestic tax revenue slipped off the target by 27 percent for the quarter, as other direct taxes missed the target by 7 percent.
On indirect taxes, taxes on domestic goods and services fell short by 2 percent, as its components of Communications Service Tax and Value Added Tax (VAT), generated outturns of 6 and 2 percent respectively in excess of the targets for the quarter.
On the external economy, taxes on International Trade also missed the projection by 23 percent for the quarter. Non-tax revenue and grants were the biggest ‘culprits’ as target were missed by 21 and 53 percent, respectively.
Expenditure targets for the quarter have also been missed by about 14 percent. The actual outturn for the quarter is GHS10,662,790,250 compared to a projection of GHS12,493,192,656.
However, the expenditure basket shows an improvement in major lines such as; compensation 6 percent, goods and services 82 percent, grants to other government units of 37 percent, and capital expenditure 48 percent.
Some expenditure lines went out of control for the first quarter with the most notable one being the expenditure on interest payments which slipped by 15 percent driven by domestic interest payments which missed its GHS 2,592,288,411 target by an extra GHS 576,618,326 for the quarter.