Ghana’s Economy Is “Broke”—CPP
The Communications Director of the Convention People’s Party (CPP), Nii Amah Akomfrah says Ghana’s economy is “broke”.
Akomfrah told Radio XYZ’s news analysis programme, ‘The Analyst’, on Saturday that the downgrading of Ghana’s economy from a ‘B+’ to a ‘B’ rating by international ratings agency, Fitch, underscores the wobbly nature of the economy.
“There are clear signs that government is overspending and they [Fitch] feel that there’s a cycle that has gone on for a very long time and the government has failed to implement its own fiscal consolidation plan. We’ve targeted for example, last year, what we think our fiscal deficit will be in respect of percentage to GDP and we failed”, Akomfrah noted.
He said: “Last year our deficit grew to 12.1 percent; that’s double the government’s target and we are continuing to have rising debt; we are continuing to have a huge wage bill which we can’t afford and these issues are causing concerns in the financial market.
Finance Minister, Seth Terkper, told Strict Proof on Thursday that though the country’s economy has some “challenges”, it is “not in tatters” as being touted by some economists and opposition members.
However, Akomfrah said: “Of course the finance minister has said ‘this is unfair’; the Governor of the central Bank has said ‘we are putting measures in place [for] a tighter monetary constraint; we are going to reduce subsidies on fuel etc, we are going to have proceeds from oil and gas and we are also going to have increased flows from donors etc’, but clearly given the fact that consistently Government gets into this sort of situation – I mean we are told that the economy has been driven to the bone – and that means that the country is broke and if we are continuing to overrun on our wages, interest costs and arrears etc, then how are we gonna get ourselves out of this situation; a country that is already impoverished by increased taxation”.
The World Bank recently warned Ghana to be wary of its borrowing since the country’s current debt stock has risen to US$43.9bn representing 49.5 percent of the debt to GDP ratio.
Other donor partners of the country also withheld their budgetary support to the West African country due to their concerns over the huge public sector wage bill of over 70 percent of tax revenue.
They also weren’t happy with the fiscal deficit for last year.
The Daily Graphic on Friday reported that the wage bill will soon hit Ghc11 billion from the current Ghc9 billion.
Some Economists, including Dr. Robert Osei of the Institute of Statistical Social and Economic Research (ISSER) of the University of Ghana, have predicted the country could soon plunge itself into a highly indebted poor country status if the level of borrowing by the Government is not controlled.
Political pundit and Editor-in-Chief of the New Crusading Guide Newspaper, Kweku Baako Jr. described the economy as being in tatters a few weeks ago.
The main opposition New Patriotic Party has also come out to say its 2012 Vice Presidential Candidate, Dr. Mahamudu Bawumia has been vindicated with the current turn of events in the economy.
However, Mr. Terkper told Radio XYZ’s Strict Proof on Thursday that “Ghana’s economy is not in tatters”.
“…I know that some people are seriously talking down the economy…when you are growing at 7 percent when others are growing at 1 to 2 percent, you don’t say that [Ghana’s economy is in tatters] otherwise you are belittling the efforts of all Ghanaians”, Terkper bemoaned.
According to him, “Ghana belongs to all of us and we are growing; we have challenges but that doesn’t mean that the economy is in tatters”.
He said the Ghana Revenue Authority (GRA) is “bringing in the revenue despite the shortfall in output which is resulting in a shortfall in revenue but we go through this all the time”.
Citing past examples, Terkper said: “Cocoa prices often go down but we have often pulled through”, but added that: “This time, even though gold and cocoa prices have gone down, we are fortunate as a nation to have petroleum, crude oil bringing in foreign exchange to stabilise the situation and that’s why you are not seeing the free fall of the cedi as would have been the case in the past so there are many many positive signs in the economy”.
He clarified that: “The fact that as a result of the single spine you are spending 65 percent of your tax revenue and therefore you are not able to meet some expenditure does not mean that the economy is in tatters”.
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