i) Effects of Public Debt on the Economy of Ghana:

• Effects on Production: Public debts are raised to finance productive enterprises of various kinds, such as steel works, cement, multipurpose projects, construction of ships, railway lines, highways, heavy electrical and engineering works, mining, and oil refining.
• Effects on Consumption: When people subscribe to government loans, they generally have to curtail consumption. Since investment of funds raised by borrowing raises the level of employment, it consequently raises the level of consumption.
• Effects on Distribution of Wealth: Public loans transfer money from the rich to the government. The fiscal operations of the government are primarily to benefit the poor. The incomes of the poor increase directly through increased employment or benefit them indirectly through the enlargement of social services.
• Effects on the Level of Income and Employment: Public borrowing is used to raise funds for financing agriculture, industry, mining, transportation, communication, etc. It increases employment opportunities, the level of income, and the standard of living.

ii) Fiscal Policy and Taxation:

• Revenue Generation: The primary function of a tax system is to raise revenue for the government for its public expenditure. Ensuring this function is discharged adequately is the first goal in the development strategy concerning taxation policy.
• Reduction of Inequalities: Taxes are used to reduce inequalities through a policy of redistribution of income and wealth. Higher rates of income taxes, capital transfer taxes, and wealth taxes are some means adopted for achieving these ends.
• Social Purposes: Taxes are used to discourage certain activities considered undesirable. Excise taxes on liquor and tobacco, special excise duties on luxury goods, and Betting and Gaming Levy are examples of such taxes, which, apart from being lucrative revenue sources, also have social goals.
• Impact on Growth: Taxes affect growth in two ways: by influencing the aggregate supply of the main factors of production by raising or lowering their net (after-tax) returns; and by influencing the efficiency of resource utilization (total productivity).