Business News of Thursday, 14 March 2013
Source: Daily Guide
The Institute of Economic Affairs (IEA) has questioned the structure of government’s 2013 Budget Statement given the wide gap between revenues and expenditures.
These structures, according to the Institute, need to be reformed in order to contain the budget deficit and to re-orient the budget to support economic growth and development while avoiding its usual destabilizing effects.
Speaking during a presentation on the 2013 Budget, Dr. John K. kwakye, Senior Economist, expressed worry about the skewed nature of our budgets in favour of recurrent expenditure and against development spending.
“My expectation is that our budgets allocate more resources to the sectors that have the greatest potential to impact on long-term growth and employment,” he said. These sectors, he said, include infrastructure, energy, human capital and technology, which represent the key binding constraints on economic growth.
“I welcome initiatives directed at addressing these constraints relating to infrastructure development, expansion of power generation capacity, the ICT project, the Science, Technology and Innovation (STI) Fund and the MASTESS programme,” he added.
He said while these initiatives are laudable, implementing them fully pose challenges. Dr. Kwakye called for various social intervention programmes in the areas of education, health, housing, sanitation and gender and children’s issue.
He said, “We can only allocate more resources to growth-enhancing and social activities if we prioritize expenditure. In particular, we have to contain the wage bill and administrative spending.”
Dr. Kwakye said the efficiency of spending must also be increased because most often results and outcome do not match expenditures. “One thing that we are not good as a nation is budget monitoring. It is puzzling how expenditures approved by parliament are often so grossly exceeded. This reflects weak parliamentary oversight,” he added.
Dr. Kwakye raised concerns about the shrinking of the manufacturing base, saying “this is where growth and employment are going to come from.”
He said government should directly support the manufacturing sector through affordable credit, energy and relevant infrastructure, as well as conducive trade policies.