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Tag: Professor Eric Osei-Assibey

  • Ghana’s fiscal outlook to reduce to 6.6% by end of 2023 – Prof Osei-Assibey

    Ghana’s fiscal outlook to reduce to 6.6% by end of 2023 – Prof Osei-Assibey

    Economist and statistician, Professor Eric Osei-Assibey has predicted that Ghana’s fiscal outlook of the local economy would decline to approximately 6.6% by the end of 2023.

    According to him, his prediction is premised on the government’s fiscal consolidation measures established as it seeks a $3billion International Monetary Fund (IMF) bailout by May 2023.

    In their recent projections, Fitch Solution pegged Ghana’s fiscal outlook at 6.6 per cent while the IMF predicted that the fiscal outlook of the country will be pegged at 7.3 percent.

    Speaking on the theme: “Ghana’s Medium-Term Outlook; Navigating through Economic Uncertainties amid an IMF at DBG/GAB economic presentation”, Professor Eric Osei-Assibey was optimistic that government will reduce its expenditure drastically to keep a positive economic outlook.

    “The projection is that the fiscal outlook looks positive. There is going to be an improvement in the fiscal deficit which stood at about 10.4%. As of last year, 2020, it was 11.2%. This is going to reduce to about 6.6%,” he said.

    He added that “What explains that is because of the front-loaded fiscal consolidation. We expect revenue performance to be good because of the new taxes bills that have been passed. We expect significant expenditure cut and government interest payment obligation will reduce for both domestic and external.”

  • Today in History: Government always prioritizing short term political objectives – Prof Osei Assibey

    According to economist Eric Osei-Assibey, political business cycles have dominated in Ghana as a result of the government‘s preference for short-term political goals above long-term gains.

    He contends that rather than raising taxes and cutting spending, the government will choose to reduce taxes while increasing spending.

    He continued by saying that this behavior had long-term negative effects, such as inflation and cedi depreciation.

    Professor Eric Osei- Assibey, Senior Lecturer in the Department of Economics, University of Ghana, has said one of the reasons the political business cycle is dominant in the country is that government prioritizes short-term political objectives over long-term gain.

    The term political business cycle is used mainly to describe the stimulation of the economy just prior to an election in order to improve prospects of the incumbent government getting reelected.

    According to him, the government will rather opt to cut taxes and increase government spending rather than increase taxes and decrease government spending.

    This practice he added, has adverse consequences including inflation and cedi depreciation in the long term.

    Speaking at the Graphic/Stanbic Breakfast Meeting on the theme “Election cycles, democratic governance, and fiscal stability: lessons for Ghana” Prof. Osei-Assibey said government and electorate will support expansionary fiscal policy.

    “Prior to an election year, governments have options of pursuing policies either contractionary or expansionary policies. Now, given the fact that government wants to increase its chance of winning or reelection, they are more likely to go for expansionary monetary policies and fiscal policy because that is the policy that is popular with the people, and that would mean the government cutting taxes, pursuing expansionary monetary policies that will lower the interest rate …”

    “These policies are very popular with the people, so, it would mean that at the end of the day government is more likely to win the elections because it would have met its side of the bargain to the people”.

    He however added that this system has its effects.

    “This situation is likely to have very adverse consequences because of the expansionary nature of government policy and this is likely to throw the economy in instability which includes high microeconomic which is higher inflation.”