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Restoring Ghana’s economy requires bold fiscal adjustments – IEA

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The Institute of Economic Affairs (IEA) has highlighted the necessity of significant fiscal adjustments to restore Ghana’s economy to a state of normalcy.

These adjustments will likely include tax increases and expenditure reductions.

During a press conference in Accra on Wednesday, June 12, 2024, Dr John Kwabena Kwakye, the Director of Research at the Institute of Economic Affairs (IEA), expressed concern that the market might doubt Ghana’s policy credibility if the country fails to implement these crucial expenditure reduction measures.

He stated, “Restoring the economy to normalcy would normally require severe fiscal adjustments requiring tax increases and expenditure cuts, which would entail economic hardships.

“Lacking the boldness to take these measures knowing that the markets may not trust our own policy credibility, we turn to the IMF for financial bailout.

“The bailout is normally supported by a programme that is invariably conditioned on stringent and often socially costly measures, including expenditure cuts, tax increases, removal of subsidies, increases in utility tariffs and public sector employment freeze.”

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