Associate Professor of Finance at the University of Ghana Business School (UGBS), Professor Lord Mensah has advised the government to find ways to cut spending as the country struggles to repay its debts.
According to him, the dire economic situation occasioned by the Covid-19 pandemic as well as the potential economic difficulties that could befall the country after Fitch downgraded Ghana’s credit rating to a B- with a negative outlook require that the government to be creative in finding solutions to the problem. the country’s problems.
Professor Lord Mensah says a viable solution to the current problem is to keep government spending fixed for a few years.
Speaking on JoyNews’ PM Express, he explained that it was rather easier to win more funds by keeping government spending fixed versus rolling out new taxes.
“I always say that you control your expenses rather than your income. Generating income is sometimes quite difficult and especially when you have an economy where the agent within the economy i.e. businesses, and individuals are not well engaged in terms of economic activities , you want to tax them or levy them around their economic activities obviously you’re going to face some resistance.
“And so we have to look at the expenditure side. Be bold enough to look at the spending side and see how we can prioritize our spending. And with that we should be able to take it as a project for the next five years continue to reduce our expenses, I mean if for nothing at all keep the expenses fixed over a few years and you would realize that we should be able to navigate through this debt situation. So there is no need to panic in any way, ”he explained.
In the meantime, he said, the government, despite the downgrading of the credit rating, can go ahead and seek funds in the international market through the sale of bonds, but these may have a very high cost.