A Partner at PwC Ghana, Mr. Abeku Gyan-Quansah, has advised the government to set realistic revenue targets in order to avoid the missed revenue targets.
With the government missing its revenue targets for the past three years, he said the Ministry of Finance must do proper forecasting, going forward, to avoid another missed target in 2020.
Speaking at the PwC’s post-budget forum in Accra, he said, “unless I have reasons to believe that my friends at the tax policy who make the projections do not have a robust module in predicting the revenue.
“We expect to spend GH¢86 billion in 2020 but expect to raise GH¢67 billion so even before we start 2020, we decided that we are going to plan additional loans of about GH¢18.9 to finance our 2020 expenditure.
“We expect that out of the GH¢67 billion that we are going to get as revenue and grants, taxes alone would be approximately GH?50 billion.
In 2019, we are projecting to raise GH?42 billion in taxes, so we should ask ourselves if we can really grow this revenue by 16 percent,” he said.
“It is about time the government looked at it so that in July 2020, we are not hit by unexpected taxes. We revised this budget in July 2019 and said we were going to raise GH¢45 billion but even what we came to revise in July, we are not going to meet that so we should be asking questions around that GH¢50 billion.
“In addition, in 2018, we raised about GH¢38 billion from taxes so when we move from GH¢38 billion to a projected GH¢42 billion this year, we are so optimistic and want to raise GH¢50 billion,” he explained.
The Country Senior Partner of PwC Ghana, Mr Vish Ashiagbor, for his part, said government’s decision to spend more on infrastructure in 2020 was a good one.
“We welcome the focus on public investment in infrastructure such as roads and hospitals, which would ensure healthy, sustainable and broad-based economic growth”.
He explained that the declining public investments over the last few years had negative implications for growth, job creation and public service delivery.
Capital expenditure has declined from 5.4 percent of GDP in 2014 to 1.6 percent of GDP in 2018.
Value for money
Mr Ashiagbor said the rebalancing of expenditures during fiscal consolidation in favour of public investment such as roads, rail and energy should improve public service delivery and create a competitive business environment for private sector development.
While recognising the need to ramp up investments in infrastructure, he called for the need to improve value for money and efficiency in public investment to enhance the economic returns to capital spending, especially within the narrow fiscal envelope that was available.
Also speaking at the forum, the Minister of Finance, Mr Ken Ofori-Atta, said the theme for the 2020 budget which was ‘consolidating the gains for growth, jobs and prosperity for all’ summed up the achievements, challenges and the government’s commitment to consolidate the achievements.
He said the management of the economy had resulted in much more stability with almost all the macro-economic indicators pointing in the right direction.
“We have also instituted measures to ensure irreversibility of the gains that have been made,” he noted.
He said some of the measures included the strict enforcement of the Public Financial Management Act, the passage of the Fiscal Responsibility Act to cap the fiscal deficit to five percent and the establishment of the Fiscal Responsibility Council.