IFS calls for political consensus for sound fiscal consolidation

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Economic tax consensus

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The Institute of Fiscal Studies (IFS) says the government must be prepared for honest dealings and full disclosures to help build the political consensus needed to craft a good fiscal consolidation strategy.

The Institute noted that the success of fiscal consolidation measures that would benefit the country in the long run would require buy-in from all stakeholders who need to be sensitized to the real root causes and the enormity of fiscal challenges in the country.

“Political leaders, both in power and in opposition, should recognize that failure to halt the deterioration of the macroeconomic environment will lead to enormous economic hardship for all,” said Dr. Saeed Boakye, researcher principal at the Institute, during a press conference. conference.

He said a good fiscal consolidation strategy involves taking bold decisions that require stakeholders and socio-economic groups to contribute their share by sacrificing the consolidation process.

Speaking on the country’s fiscal situation, Dr. Boakye said the country was in a very poor state compared to its peers on the continent and the middle income bracket due to the excessive cost of servicing the debt due. to a large accumulation of debt over the last decade and to a very high employment rate. remuneration due to the power of public sector unions.

The government, he said, was challenged to control employee pay for the purposes of fiscal consolidation by reducing the pay bill as a ratio of total revenue and subsidies to match the average of peers in the country. country.

“This can be done by ensuring that the growth rate of the compensation bill falls below the growth rate of total revenue and subsidies over a period, which will naturally lead to a gradual reduction in the ratio of the compensation bill. compensation from total revenue and grants,” he said. Explain.

To meet the debt service challenge, the macroeconomist said the government must step up its fight against corruption and waste and renegotiate debt restructuring with its creditors.

“If successful, this can help minimize debt servicing expenditures, at least in the short term, and give the government some breathing room while it pursues long-term policies to improve the fiscal position,” did he declare.

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