Budget reflects current realities but...

The government admits the deficit was too large as it went above the target of GH¢4.6 billion, equivalent to 6.7 per cent of GDP. The budget deficit recorded for the corresponding period in 2011 was equivalent to 4.0 per cent of GDP.

The domestic primary balance also registered a deficit of GH¢1.17 billion, equivalent to 1.6 per cent of GDP, against a targeted surplus of GH¢1.73 billion, equivalent to 2.5 per cent of GDP.

Following the huge deficit, the government has accordingly revised the figure downwards in the budget to nine per cent for 2013.

Mr Gatsi said the cut back was in order considering that growth for last year was 7.1 per cent, still among the highest in sub-Sahara Africa, and projected to be maintained at about eight per cent of GDP for 2013.

“The growth situation for me was well explained in the budget. People thought because we recorded 14 per cent in 2011, the growth rate was going to remain the same. But we should understand that the 7.1 per cent is still the highest in Sub-Sahara Africa,” the economist, who is also the President of the Association of Chartered Certified Economists (ACCE) Ghana told the GRAPHIC BUSINESS.

The economist was also happy about the areas the budget channelled the oil money to include expenditure and amortisation of loans for oil and gas infrastructure; road and other Infrastructure; capacity building (including oil and gas), and especially agricultural modernisation.

“Investing in agriculture is of particular importance to avoid the Dutch Disease. Agricultural investments will also help in creating jobs and sustaining those that are already engaged in agriculture,” Mr Gatsi said.

He was, however, not happy the tax initiatives introduced to purposely cater for expanding the funding of the National Health Insurance Scheme (NHIS), which is currently facing dire financial constraints.

“I was expecting that the rate of National Health Insurance Levy to increase since it is the major source of funding the NHIS. The scheme has expanded in scope and we need to find other ways of expanding it,” the economist said.

He said otherwise the ministry of finance could have allocated some of the oil money to fund the scheme, since contributions from members cover only about 10 per cent of the funding cost.

In an interview, the Country Director of SEND Ghana, Mr George Osei-Bimpeh, agreed with the intention of the budget to reduce deficit, while keeping pace with infrastructural development. 

However, he added, there were challenges because some of the proposed strategies to reduce poverty could rather result in the poor paying for services at a much higher rate than they were used to.

The missing link he identified was the extent to which government was only focusing on removal of subsidies without looking at mitigating the effect on the poor. 

 “If we are looking at the situation of financing the deficit and that implies removing subsidies from fuel, the question is that what mitigation measures have you put in place to cushion the poor?, he quizzed.

“Do we have a lot of more of for example the Metro Mass Transport (MMT) buses that will provide cheaper, efficient and affordable services to citizens, so that they are not left at the mercy of private individuals who would certainly take advantage of petroleum price hikes to make life unbearable for these people,” he questioned.

It was not clear, he added, how the government was strategising for the poor in the budget, particularly with mitigation measures, adding “there should be some efficiency in MMT operations so that people can rely on it instead of the long queues that are normally seen at the various bus terminals.”

He said although cutting back on expenditures were in the right direction, the government should come out clearly with some social intervention.

“It is a necessary evil we have to introduce but then we still have to think about how marginalised groups can be protected. How much allocation for instance is made to the Ministry of Gender and Social Protection so that the core poor are protected,” he added.

On new initiatives, he commended government’s strategy to put up 50 community secondary schools, as that would reduce the burden on parents having to take their children to boarding schools which came with extra costs.

Estimates for ministries, departments and agencies did not accompany the budget and besides increasing the income tax bracket and personal reliefs, all other tax policy initiatives are to be tabled separately for passage into law. GB

Story by Samuel Doe Ablordeppey and Ama Amankwah Baafi

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