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INSTITUTE OF CHARTERED ACCOUNTANTS HOSTS PRESIDENTIAL LUNCHEON 2017

The President of the Association of Ghana Industries (AGI), Mr James Asare-Adjei, has urged government to institute measures to check abuses and poor implementation of subsidies and market interventions.

 

 Mr  Asare-Adjei noted that a good number of the world’s leading economies had been able to transform on account of government subsidies and market interventions—citing China whose economy was being driven by low production costs and good export incentives.

 

However, in the case of Ghana, he said, several interventions and subsidies, though well-intended, and with a view to growing the economy, had been abused.

 

He described the subsidy on pre-mix fuel for fishermen, subsidy for agricultural sector, subsidy for lifeline consumers of electricity, stimulus package for distressed companies, subsidies for investment in solar and energy saving devices and subsidies to investment to encourage fledgling sectors as interventions that were either misplaced or abused to the detriment of the beneficiaries and the state.

 

Mr  Asare-Adjei was delivering the key note address at this year’s Annual Presidential Luncheon of the Institute of Chartered Accountants (Ghana) (ICAG) in Accra on Friday.

 

He noted that Foreign Direct Investments (FDIs) and certain strategic investments to Ghana had enjoyed significant exemptions that were beginning to take a toll on Ghana’s national budget, citing statistics from an ActionAid Study indicating that Ghana lost US $1.2 billion annually on account of exemptions granted such investments.

 

He expressed worry that billions of cedis from state and local economic incentives aimed at small businesses ended up with a few large and well-established businesses.

 

Mr  Asare-Adjei urged government to prioritize some of the exemptions and stressed the need for indigenous businesses to get their fair share of the roll out of exemptions and tax holidays, adding that if government subsidized indigenous businesses, business could expand and the prospects of job creation would increase.

 

He also called on government to use market interventions to address the high cost of credit in Ghana and also adopt a targeted tax policy where imports/raw materials which already existed locally, should attract higher taxes.

 

Furthermore, he said, policy makers should leverage the provisions under the Common External Tarrif (CET) to cushion local products which were exposed to competition from imports.

 

In an address, John Awuah, Chief Executive Officer, Universal Merchant Bank and Chairman for the occasion, said even though a good number of the world’s leading economies had been able to transform on account of government subsidies and market interventions, implementation abuses have often defeated the purpose of the interventions in other countries.

 

Mr Awuah mentioned Kenya and the Asian Tigers—South Korea, Taiwan, Singapore and Hong Kong—who employed effective government interventions in the market economy to register exceptionally high economic growth rates.

 

He said although subsidies and market interventions were inextricable elements in economic development, they could not reflect a strategic approach to Ghana’s economic development, unless they were borne out of well-thought-out strategies, rather than of political expediencies.

 

He, therefore, urged Government to, strategically and in a consultative manner, use subsidies and market interventions to create the facilitating environment for the private sector to drive its vision and to promote economic growth.

 

Welcoming the audience, Mr Christian Sottie, President, ICAG, underscored the importance of the role of accountants in growing the economy.

 

Mr Sottie said it was the duty of accountants to support government efforts at promoting the social and economic stability of the Ghanaian economy, adding that the annual Presidential Luncheon provided the platform for the discussion of socio-economic issues.

 

This year’s event was on the theme: “Government Subsidies and Market Interventions—The Strategic Approach to Economic Development.”

 

Source: ISD (G.D. Zaney)