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Former Finance Minister and economic advisor to former President John Dramani Mahama, Mr. Seth Emmanuel Terkper, has revealed that the true test of sound economic management lies not in the absence of shocks, but in the country’s readiness to withstand and respond to them.
Speaking on recent economic developments, he noted the importance of building and maintaining financial reserves during periods of economic stability to cushion the impact of unexpected downturns.”
He also discussed the role of temporary levies during periods of austerity, stressing that such measures should be time-bound and removed once stability is restored. According to him, this is a standard principle of counter-cyclical economic management
Using the recent outbreak of Mpox as an example, Mr. Terkper challenged policymakers to reflect on lessons from the COVID-19 pandemic.
“We are saying is that you cannot manage an economy without crisis, you cannot manage an economy continuously for four years, without one crisis or the other.
“Mpox is in the news, how are we preparing for it? Or how did we prepare for it? Have we put some reserves, learning from COVID, so that when Mpox comes, we follow those reserves to manage? And that is when the reserves you are keeping, because you will have to tackle it. That’s when you take the reserves to manage it.” He stated.
The Former Finance Minister disclosed that even the current administration acknowledges the need for caution amidst positive economic trends as he likened economic reserves to household savings, a form of sacrifice today to ensure stability tomorrow. Hefurther revealed that such fiscal discipline is essential not just for weathering crises, but also for sustaining long-term reforms.
“The President is saying things are going well, let’s be careful, in essence what he’s saying that when the trend starts to reverse, make sure that you have reserves to put back reserves, which is sacrifice.
“To set reserves as in households, as in businesses is sacrifice, so when we create it and the shifts are occurring, then we have to fall on it, you know, to make sure that, you know, we stabilize the situation because it’s good to stabilize and to sustain reforms.” He said.
On Ghana’s fiscal health, he urged a return to a stronger Value Added Tax (VAT) regime and noted ongoing efforts by government officials to seek technical assistance in improving tax policy.
“Our revenue today is a factor, and I’m talking revenue, not tax revenue. The tax GDP ratio is around 15%. The revenue is around 17%, 18% but as a middle-income country that we have become, it is our tax to GDP ratio that should be 17%, 18%. Even for an African country, it is not 15% and that is why the president, the minister, and others have spoken about getting technical assistance in order to bring the VAT regime back to where it was.” He said
Source: Elvisanokyenews.net
