Drastic spending cuts will spur economic revival  – banking consultant

By Sandra Agyeiwaa OTOO

A banking consultant, Dr. Richmond Atuahene, has called for profound fiscal reforms to drive the country’s economic recovery.

He advocated stringent expenditure reductions within ministries and public agencies to promote fiscal prudence and efficiency.

He said this at the just-ended Tesah Investment Dialogue in Accra. It was themed ‘Clarity in the Chaos: What Lies ahead for the Ghanaian Economy?’

The Tesah Investment Dialogue discussed topics such as monetary policy, price stability and the fiscal environment, providing expert insights into how these factors play a role in economic growth.

“Debt sustainability is not only about debt management. At times, you need to make expenditure cuts. I mean, we need to cut the level of expenditure on ministries and MDAs. What is happening is that we’ve killed people’s industries and people are driving in V8 as if the V8 is being produced in Accra,” he stated.

Dr. Atuahene emphasised the enormity of Ghana’s economic issues, highlighting the importance of prioritising the private sector’s role in generating long-term progress.

He went on to urge authorities to allocate resources to empower the private sector to lead the transition to economic stability and job creation.

“Let the private sector have cheaper funds to turn the economy’s fortunes around. But if the government crowds out the private sector, it is a very dangerous thing; there will be no recovery and if the economy doesn’t recover, unemployment will be very high,” Managing Director of Tesah Capital Limited, Eugenia Basheer, said.

“We are cautiously optimistic that as long as the government sticks to the solutions they have proffered in the budget, we expect to see a turnaround; and we expect that cautiously, investors will start returning to the market and we all see the turnaround that we are envisaging,” she added.

Mrs. Basheer added that the challenge for most investors is limited investment options.

An Assistant Professor of Economics at Niagara University, Dennis Nsafoah, also stated that the government has primarily relied on domestic borrowing, especially through Treasury bills, alongside concessional loans from the IMF and the World Bank since 2022.

In 2023, for instance, approximately GH?48billion was raised through the money market, covering 65 percent of the government’s financing needs.

“I expect this trend to continue in 2024 and 2025. My view is that the government will successfully secure the needed funds from the Treasury bills market until it resumes bond issuance, anticipated in 2025,” he stated.

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