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The Institute for Fiscal Studies (IFS) has described worryingly the increase in government extrabudgetary borrowing
According to IFS, this hinders the effectiveness of fiscal control, weakens the credibility and transparency of fiscal policy and hides the real fiscal position and the government's debt.
In its last economic review preceding the mid-year budget presentation by the Minister of Finance on Monday, July 29, 2019, IFS noted that the leniency granted to extrabudgetary spending undermined the credibility and efficiency of the budget. the effectiveness of the recently adopted budget deficit ceiling (5% of GDP) to ensure budgetary discipline, since the ceiling only applied to budget operations covered by the budget.
"We believe that it is time for the budget to be covered and that the government's financial statements be extended from the central government level to the consolidated general government in order to fully capture all expenditures and borrowing from statutory funds, government local authorities and all other institutions engaged in government activities. At present, the scope of the budget and financial statements precludes a comprehensive badysis of overall fiscal policy and its macroeconomic impact, while limiting accountability.
"To keep the debt burden on an upward trajectory, the government must present a strategy to set the debt ratio on a path of reduction as quickly as possible. The strategy should include strong income policies, in particular, to help protect critical spending, such as investment spending, while reducing debt, "told reporters Leslie Dwight Mensah, economist at the 39; IFS.
He also said: "The government should strengthen the administration and mobilization of non-direct taxes, where the bulk of the fiscal revenue gap has been concentrated since 2017, in order to improve the performance in terms of income . To increase non-tax revenue, there is a need to revise user charges and royalties collected by government agencies whose real value has declined due to little or no adjustment over long periods of time. Revenue gains should also be obtained by quickly following the proposed reform of the tax exemption regime, for which the government has submitted a bill to Parliament early in 2019. "
He added that recurrent periods of exchange rate depreciation, especially at the beginning and at the end of each year, required a firm and preventive political response. Additional measures should also be taken to limit the country's exposure to unstable foreign investors in the region. domestic debt market.
On the need to revive the economic growth of the non-extractive sector, particularly the service sector, which was hardest hit by the financial sector crisis, a robust recovery of the financial sector was needed.
"This implies, crucially, that the government quickly pays unpaid bills to entrepreneurs and private sector service providers to address the backlog problem that has contributed to the high rate of non-performing loans in the banking sector. and the limitation of loans. The government must also step up its tax revenue efforts to prevent further growth-reducing investment spending in order to meet the deficit reduction targets. "
– Daily guide
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