Invest more in profitable sectors

Government expenditure always exceeds revenue but very little is there to show and the unemployment gap continues to widen. Charles Benoni Okine reports on some suggestions from ISSER as well as outstanding promises yet to be fulfilled from last year’s budget.

The Institute of Statistical, Social and Economic Research (ISSER) has called on the government to allocate more funds in this year’s budget to the sectors that have better capacity to absorb more people into the job market.

It has also stressed the need for the budget to be more systematic and scientific with respect to development projects with efficiency and maximization of outcomes as the ultimate goal and not those carried out for mere political reasons.

The institute made the call through the Graphic Business in respect to its expectations of the 2013 Budget Statement and the Government Economic Policy to be delivered to Parliament on Tuesday, March 5.

Professor Peter Quartey, Senior research Fellow at ISSER and the Head of Department of Economics at the University of Ghana, Legon, said “I expect the budget to have in it more expenditure on the sectors that employ the most” and mentioned such sectors as agriculture and manufacturing. 

The call comes in the wake of calls on the government to create more job avenues in the system for the teeming masses of people in the country without jobs.

Although it has been the intention of many a government to create jobs for the people, none has so far been able to draw up pragmatic programmes to absorb the masses right from the skilled to the unskilled although the opportunities exist to ameliorate the situation which has become dire and almost becoming a canker.

As quoted by one famous reggae music icon, Bob Marley, “In the abundance of water, the fool is thirsty”, the reality seem to be hitting country as the avenues exist to create jobs but very little effort is being put to make it a reality.

Professor Quartey said “If we put in more investment and more favourable policies, we will flourish and be able to employ more people that would help in reducing the unemployment challenge that we have”.

Against this background, he noted that “we want to see more agricultural modernization, more marketing channels, and better access to credit environment for private sector operators”.

Professor Quartey said it will also be in the interest of the country to invest more of the oil money in transforming agriculture adding that “and of course we need to also minimize corruption and promote good governance”.

Against this background he further noted that “I will expect to see some of the policies and initiatives that will help in blocking the leakages within the public expenditure framework”.

Within the monetary sector, he called for measures to reduce interest rates in the country saying “Interest rates are too high and do not promote private business; We want to see it come down from the recent 31 per cent/32 per cent to about 20 per cent if not even lower so that private businesses can borrow and invest”.

On the country’s deficit, he noted that ISSER would require the central bank to manage the deficit and also managing the inflation rates while ensuring that banks maintain good strategies and policies that would promote savings and investment.

According to Dr Robert Osei, Senior Research Fellow of ISSER and the Head of the Economics Division of ISSER, major reforms in the public sector and a focus on key development projects should be the primary goals that should be driving the country’s development process.

He said the country is faced with many significant fiscal challenges and noted that although election times tend to exacerbate it, “it is not necessarily a problem that is engendered by elections. There is a problem fiscally and during election time, it just becomes bigger”.

“The fiscal challenge is in very simple words, the challenge of balancing your expenditure and revenue. Our revenues are consistently below our expenditure so while we are able to, based on our own projections, meet our revenue targets, we are not able to meet our expenditure target or exceed our expenditure targets in almost every year”, he said.

Dr Osei “So given this very simple nature of the problem, what it means is that we have two arms of the problem”.

To him “the way to solve it is to bring the two together; So increase the revenue or decrease the expenditure”.

In terms of revenue improvements, he said “I think that one has heard a number of discussions from the ministry so there are indications that still the revenue collections would be broadened to try and capture more people into the net so that if everybody contributes one cedi, then as the number of people contributing 1 cedi grows, the revenue grows”.