NPP urges government to restore fiscal discipline
The New Patriotic Party (NPP) has called on the government to restore fiscal discipline in all public sector departments, since the current economic management style will lead to economic suicide.
Advertisement
"The government's economic management style, consisting of reckless spending, more borrowing and increased taxation, will lead to economic suicide," it said.
Addressing a press conference dubbed, "Ghana's troubled economy: Where are the remedies?” in Accra today, a former Minister of Finance, Mr Yaw Osafo-Maafo, said the reckless expenditure of the 2012 election year was now catching up with Ghanaians.
He explained that in 2012 alone, the NDC administration illegally overspent its budget by GH¢4.8 billion, adding that with hindsight, the government now realised that it had misconducted itself.
"Unfortunately, it is the ordinary people who now have to bear the effects of the bad expenditure of the Mahama government during the 2012 elections," he said.
The press conference was attended by the top brass of the NPP, including the First National Vice-Chairman, Mr Fred Oware; the Minority Leader, Mr Osei Kyei-Mensah-Bonsu; the Deputy Minority Leader, Mr Dominic Nitiwul; the Minority Spokesperson on Finance, Dr Anthony Akoto Osei, and Ms Esther Owusu, the National Treasurer of the party.
Also present were ministers in the Kufuor administration, and some NPP Members of Parliament (MPs).
Single-Digit Inflation
Mr Osafo-Maafo said for a long time the government's response to every issue concerning the economy was that it had achieved single-digit inflation.
"Even when Dr Mahamadu Bawumia of the NPP questioned the disconnect between that single-digit inflation and other economic indicators, such as lending rates and cost of living, the NDC government refused to abandon its single-digit inflation propaganda," he said.
He said fortunately or unfortunately, that controversial single-digit inflation had evaporated into thin air, stressing that in the last three months inflation had been in double digits, peaking at 11.2 per cent in May 2013.
"Now the government has no excuse or choice but to abandon the propaganda and fix the ever-rising lending rates and the ever-increasing cost of living," he added.
Public Debt
Touching on debts, Mr Osafo-Maafo stated that one of the signs of the bad economic management that the country had been subjected to was the alarming rate at which public debts were being accumulated.
He explained that the NDC administration inherited total public debt of $8 billion, equivalent to GH¢9.5 billion, at the beginning of 2009.
"Now, within four and a half years, this debt has escalated to GH¢38.5 billion. On the average, therefore, Ghana under the NDC is adding GH¢6.4 billion every year to its public debt," he stated.
Mr Osafo-Maafo said a great chunk of the debt; that is, 55 per cent, was from domestic borrowing, explaining that in 2012 alone, the government borrowed in excess of GH¢7.1 billion from the domestic market, even though it projected to borrow GH¢2.7 billion.
"Given the current debt burden of the country, each Ghanaian, including the person who has been born today, owes GH¢1,540. This does not include the $3 billion Chinese loan, nor does it include the $1 billion Eurobond money the government is seeking to raise," he stated.
He added that at the end of December 2012, the government was indebted to many state-owned enterprises to the tune of over GH¢3.1 billion.
Mr Osafo-Maafo explained that while the government owed GH¢1.5 billion to petroleum sector entities, it owed utility-related agencies GH¢1.6 billion, excluding the GH¢796 million illegal fuel price margins the court ordered the government to refund into the Consolidated Fund.
Arrears
On arrears, Mr Osafo-Maafo said in accusing the NPP of "profligate spending" in 2009, the NDC stigmatised the party for "distressing the economy with huge arrears amounting to GH¢1.8 billion”.
He said at the end of 2012, however, government arrears had hit GH¢5.4 billion, of which GH¢4.8 billion was incurred in 2012 alone.
He said the NDC accused the then NPP government that a large portion of the arrears arose from contracts that were in clear breach of the procurement law.
He said the truth of the matter was that today over 95 per cent of all major government contracts were by either sole sourcing or selective tendering, adding,
"Wherever and whenever selective tendering and sole sourcing occur, red flags must be raised; chances are that the country is not having value for money."
The way to go
Mr Osafo-Maafo suggested to the government to tackle corruption earnestly and sincerely.
He said it was clear that top government officials facilitated the payment of judgement debts to Isofoton, Waterville and Woyome, yet no prosecutions had been brought against them.
"Gargantuan payments in the name Wof judgement and settlement debts must cease and all monies paid illegally recovered, in accordance with the Supreme Court orders," he said.
Mr Osafo-Maafo also advised the government to reduce its appetite for borrowing from both domestic and foreign sources, explaining that in 2013 alone, interest payments on debts were projected to be over GH¢3.2 billion.
"The way to avoid excessive interest payments is not to borrow more. It just does not make sense. High domestic borrowing crowds out the private sector and collapses businesses, thereby increasing unemployment," he stated.
He advised the government to develop a plan to enhance revenue mobilisation but not through increased taxation, while there must be efforts to revive the ailing agricultural sector of the economy.
When a Deputy Minister of Finance, Mr Cassiel Ato Baah Forson was reached for his comments, he told the Daily Graphic that he had just received the statement presented by the NPP at the press conference.
“We are digesting the contents of the statement and will give our response at a similar press conference on Wednesday. That is what I can say for now”, he said.
Fact Sheet
The NPP has accused the government of overspending its 2012 budget to the tune of GH¢4.8 billion.
It said in the government’s response to every issue on the economy was that it had achieved single-digit inflation. However, the single-digit inflation had risen to double digits in the last three months, peaking at 11.2 per cent in May 2013.
According to the NPP, government’s total debt had increased from the GH¢9.5 billion it inherited in 2009 to GH¢38.5 billion as of the end of 2012.
The government is indebted to state-owned enterprises (SOEs) to the tune of GH¢3.1 billion. Out of the amount, GH¢1.5 billion is owed to petroleum sector entities, while the remaining GH¢1.6 billion is owed to utility-related agencies.
The NPP said the government must restore fiscal discipline by refraining from reckless spending, more borrowing and increased taxation, which according to the party, would lead to economic suicide.
By Emmanuel Adu-Gyamerah