Businesses in the country are calling on the government to focus attention on stabilising the cedi to complement recent interventions in the 2017 budget and create the enabling environment for business and industry to thrive.
The new government in its first budget statement abolished some nuisance taxes, a move that has widely been welcomed by industry and the business community but the positive effect of these interventions should have on the businesses is still being threatened by the depreciation of the Cedi against the major trading currencies, especially the United States Dollar.
The cedi has been on a continuous fall against the dollar causing uneasiness among the business community in the country.
As of Friday, March 3, 2017, the Cedi was selling at GHS4.5 to a dollar, according to the Bank of Ghana rates.
However, the Cedi traded at GHS4.7 per dollar at Forex Bureaus extending its drop this year to about 13% and making it the world’s second-worst performer this year after Sierra Leone’s currency.
Cedi’s fall hikes prices of imported products
The depreciation of the Cedi has hiked the prices of imported products to the extent of the price of a gallon of petrol jumping to GHS20.
Key indicators
Government targets to reduce budget deficit to 6.5% of gross domestic product in 2017 from 8.7% on a cash basis last year.
In addition, government also aims to reduce inflation to 11.2% by the end of 2017 from 13.3% in January and has forecasted Gross Domestic Products (GDP) growth of 6.3% in 2017.
The 6.5% targeted budget deficit translates into GHS13.2 billion.
Budget policies to help Cedi stabilise
The deficit target and other measures should restore confidence in foreign investors to show interest in Cedi investments once again which could go a long way to firm up the Cedi.
According to Barima Dr Ofori Ameyaw I, President of The Ghana Union of Traders Association (GUTA), government must as a matter of urgency, focus on stabilising the Cedi to consolidate the gains it has made with the removal of the taxes.
‘”The Cedi’s depreciation is still a big problem to businesses. It makes it difficult for us to plan and usually makes us run into losses,” he said.
He was, however, optimistic that government’s abolishment and reduction of some tax will put some businesses, who hitherto, were collapsing, back in shape.
‘”The President has heeded to his promise on these nuisance taxes. They (taxes) were killing businesses; this is because if you are a business and a greater part of your profit goes to pay taxes you’ll collapse,” Mr Ofori said.
AGI on budget
The Association of Ghana Industries (AGI) described the 2017 budget as a business-friendly one, with the various tax reliefs that came with it.
The Association says it is looking forward to the stimulus package that government wants to give to some selected industries to boost production.
Welcoming the changes made in the tax system, the President of the Association, Mr James Asare Adjei, said government was being proactive in respect of making sure that certain loopholes or leakages within the tax system are blocked.
It described the initiatives as extremely welcome to the private sector saying they would resuscitate industry and restore jobs.
The Association, however, said it remained mindful of previous experiences where laudable budgets with very good intentions have been put in place but their implementation had been ineffective.
“AGI welcomes the budget and the areas related to the country’s industrial growth but let us ensure those fine policies and measures are effectively implemented to boost productive outcomes,” he said.
Business owners in general have expressed confidence in the interventions of the new administration to prepare the right footing for businesses to thrive in the country as indicated in the budget.
They have, however, called for the speedy implementation of the programmes contained in the budget to set the country on the path of growth again.
The Budget which announced the removal and reduction of some taxes also laid out some programmes and special initiatives to revitalise industry restore the fortunes of the agricultural sector and deal with the alarming unemployment crisis.
The Minister of Finance, Mr Ken Ofori-Atta announced the establishment of a national industrial revitalisation programme with a stimulus package for industry to provide technical and financial support to distressed but viable companies.
It would be recalled that GUTA through 2015 and 2016 protested severally over the introduction of what it referred to as ‘killer taxes’ by the previous government.
The GUTA president recalled that President Akufo-Addo, during his campaign for the 2016 general elections, promised to make the business environment friendlier for the private sector.
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