Ex-ante Assessment of the ‘CARES’ Program with Dr. Said Boakye

The 2020 mid-year budget statement presented by the Finance Minister, Hon. Ken Ofori-Atta, announced a very ambitious programme, The COVID-19 Alleviation and Revitalization of Enterprises Support (CARES) program to mitigate the impact of the pandemic on the lives and livelihoods of Ghanaians as well as to ensure Ghanaians quickly emerge from the pandemic with a stronger and more resilient economy.

Under The CARES Program, the government plans to invest GH¢100 billion into the Ghanaian economy over the next three and half years.

In analyzing the critical success of the initiative, a Senior Research Fellow at the Institute for Fiscal Studies (IFS), Dr. Said Boakye believes the amount in question (GH¢100 billion) is too huge and doubts the government has the capacity to raise the said amount. He, therefore, suggested that government should pursue something more moderate.


 “I agree that the government has to do something but I don’t think GH¢100 billion is the way to go. Government should pursue something moderate so that over time they can increase it… it’s a very huge amount of money and the sources of funding are not that convincing for now.

“… Where will the money come from? The biggest component is to come from the private sector, about 70% or GH¢70 billion… The same private sector you are going to help be on its feet are the people going to support you with GH¢70 billion? So, I’m finding it difficult to see how they can attract that GH¢70 billion from the private sector.”

The feasibility of the CARES Program

The announcement of The CARES program threw many Ghanaians into disarray as to where the funding was going to come from. Considering the economic woes facing various countries across the globe, raising such an amount on the international market looks bleak.

Picture 1 Dr. Said Boakye                    Dr. Said Boakye, Senior Research Fellow at the Institute for Fiscal Studies (IFS) 

The feasibility of the program, according to Dr. Boakye, is difficult to determine since the full details of the program are yet to be disclosed.

He however, raised red flags questioning the possibility of the government’s ability to raise the said amount if it considers to do that internally or on the foreign market.

It’s very difficult to conclude that it’s feasible or not in the sense that I have not seen the details. But I’m raising red flags about the sources of funding; I find it difficult to understand where they will come from. Domestic private sector rather needs help and for foreigners you need certain things to attract them. And so far, attracting GH¢70 billion, if you look at our record, it’s not so easy…”

 Ghana’s attractiveness to investors

Currently, the pandemic can be said to have had its devastating activities on everyone including the investors government is trying to attract and those investors are now having a rethinking of how and where to invest.

Dr. Boakye noted that many people are coiling because they are afraid and do not know when the pandemic will be over.

“So, if you assume that the pandemic will be over and perhaps it lasts a bit longer, then you will be the loser. But, if investors believe that the pandemic is going to be over very soon, perhaps businesses will also try thinking of investing. But the question is, how attractive is it to invest in Ghana?”

The Senior Research fellow also revealed that investors do not just invest but they consider certain macro-economic fundamentals in the country before making the decision to invest in such countries.

The first thing investors look at is the government finances.  Government finances, that is the foundation of the entire economy. For instance, if the government finances are such that deficits are always high, you realize that it will have macroeconomic impact – macroeconomic instability -- and investors are not going to invest in such countries.  Thus, if the government is not able to attract foreign investors, it will mean that the government may also be borrowing from the financial system taking the money that private sector will need.

But the sad news is that even before the COVID hit, the government finances were in a very poor state and the pandemic has worsened it. So, I’m still finding it very difficult to see how the government will be able to attract GH¢70 billion from the external sources.

Raising tax to GDP ratio– Realistic?

The Finance Minister in his mid-year budget presentation revealed that government was putting policies and reforms in place to raise the tax-to-GDP ratio from the current level of 13 percent to 20 percent by 2023.

This, he said, formed part of the measures the government was putting in place to raise revenues for the other developmental projects under the CARES program.

However, looking at the current situation in the country where businesses and households are struggling for survival, the question that comes to mind is whether this target is realistic.

The IFS Senior Research Fellow, said this target was not realistic looking at the past trends in revenue mobilization over the years.

He suggested that the projections for revenue growth in 2021 is also very marginal and such based on the past records of the current government with regards to revenue mobilization, it is not possible to meet this target.


Based on what they have been doing in the past; the behavior of the current government since they came to power, and even if I’m to expand on that– in 2009 to 2012 revenue growth was 31.5%; then this amount decreased to 19.6% in 2013 to 2016; and from 2017 to 2019, it decreased further to 16.7% as average. In fact, if you even include 2020, it’s 12.7% including the projected revenue for 2020 as average. Imagine 31.5% average growth in 2009 to 2012 and it has decreased to 12.7%. If you look at government projection for next year, revenue growth is also going to be very marginal. From GH¢53 billion, the government is projecting about over GH¢56 billion which is a very marginal increment. So, you do not see where the money will come from.


“But the Government is arguing that they are going to get money from property tax. I have not done assessment as to how much they can raise from property tax. That is why I started by saying perhaps they are stepping on something I do not know. So, let us see if they are going to use a different methodology and will be more aggressive in taxing properties.  The Vice President was, for instance, saying, they are going to digitally tag every property in the country so that they know everything. I do not know how much will come in and if this will bring in the money, then good. But with this historical record, I will say no.”

Time to fall on extractive resources for development

Considering the severe fiscal strains on the Ghanaian economy which has been worsened by COVID-19, businesses and households have also been severely affected. Lives and livelihoods are threatened, jobs are lost and above all, lives have been lost.

The reduction in incomes for households and profitability of businesses means taxation will be a very bitter pill to swallow at this time. It has therefore become very important to consider how well government can raise revenues without putting much strain on the people it seeks to support.

According to the economist, he believes, this is the time the government can fall on the extractive resources that God has blessed this country with.

He suggested that the extraction of these resources could raise the much-needed revenues for development rather than always taxing the citizens. He cited a number of countries in the Middle East and elsewhere, including Saudi Arabia, the United Arab Emirates, and Botswana, which have raised large amounts of government revenues from their extractive resource.

Therefore, these countries over the years have relied on extractive resources for development, achieving high levels of per-capita national incomes. He expressed the worry about how we allow foreigners to extract our resources and only give paltry sum in return.


“ I have been selling this idea and of course the government knows. Do you know that in this country, and of course almost everywhere, that extractive resources belong to the public?


The gold in the ground, the oil in the ground; they are all government properties. And if they belong to the public, and you the government is the one to use them, you have to be more interested in the revenues which naturally belongs to you. Taxation means taking money from the private sector.  If you tax the private sector too much, you are killing it, because it’s the transfer of money from one economic agent to another economic agent. And we know that the private sector is always more efficient in utilizing money. And you are transferring it to government which is usually less efficient.



Some revenue from taxation to the government when moderately and appropriately done is important because of the need for public goods. But you don’t tax so much money from the private sector. My concern is what about the resources that belong to the government?

“… So, the solution is that, the government should concentrate on the extractive sector. I keep on repeating, you cannot allow foreign investors to come and tap your resources and take the lion’s share away, and you get pennies out of it and your target is the private sector. It’s just illogical to me.”


Ghana ripe for IFSC?

A key pillar of the CARES program is to make Ghana a regional financial hub by establishing an International Financial Services Centre (IFSC).

However, looking at the country’s financial sector, it raises major concerns as to whether Ghana has what it takes to achieve this within the stipulated time. 

According to Dr. Boakye, merely establishing a financial center is not what will make Ghana a financial hub. He revealed that other factors needed to be considered as well to attain such a dream.

You can have a good and attractive financial sector not necessarily because you have established a financial center but because there is so much trust in your economy.”

He revealed factors such as “Your macroeconomic environment has been stable for a long time, your fiscal position has been strong, your monetary management is good, then the real sector is picking up.

“Based on this, people will then say, look at Ghana, it’s been managed well. When people feel this way, it is then that when you have the center, they will trust you and use your country as their financial intermediation center. But just merely establishing a center is not the solution. I will not tell them not to establish this, but I will say they have to improve upon the economic management of the country.”

The economic pundit, in concluding, advised the government to be efficient in spending and in resources allocation despite the fact that 2020 is an election year, with already high deficits which is compounded by a pandemic.

This, he believes, will reduce the deficit and bring government back on track in her quest to build a stronger and a more resilient economy within the next 3 years.

He further added that drawing from the experiences of previous policies, the government should be careful with respect to the steps it takes towards the delivery of this new policy– Ghana CARES program.

  • Struggling luxury UK carmaker Aston Martin has announced that chief executive Andy Palmer has stepped down.
  • Aston Martin sales halved in the first three months of the year, as the start of the coronavirus crisis took hold.
  • The company sold 578 vehicles in the first quarter, down from 1,057 in the same ...