2022 budget must set faster pace of fiscal consolidation – Economist

• Finance Minister presents 2022 budget on November 17

• The 2021 budget had a total revenue target of GH¢72.45 billion

• The fiscal deficit is expected to be financed from both foreign and domestic sources

Senior Research Economist at Databank, Courage Martey, has urged government to use the 2022 budget presentation to set the pace of fiscal consolidation.

According to him, Finance Minister Ken Ofori-Atta must announce a raft of measures that seek to reduce the gap between revenue and expenditure of government.

In an interaction with Citi Business News, Courage Martey said “When I pick the 2022 budget, I want to see a faster pace of fiscal consolidation. What I mean by that is I want to see a faster reduction in the gap between spending and revenue. Because the deficit must be financed by borrowing.”

“Now if you look at what is happening on the global financial market in the past few months, and what will happen this quarter and into next year and even beyond, we are likely to see interest rates going up,” he added.

He added that as part of adverse impacts on the coronavirus pandemic, economic developments in the international financial market will make borrowing to finance governments expenditure rather hurtful.

Meanwhile, central bank Governor, Dr Ernest Addison has also urged government to use the 2022 budget to reset fiscal policy and create a more credible path towards medium-term fiscal sustainability.

According to him, this is crucial to accelerate the country’s financial stability which would largely improve the cost of credit.