The New Patriotic Party (NPP) Member of Parliament for Wenchi, Prof. George Yaw Gyan-Baffour has described government’s demand for additional GH¢3.2 billion in supplementary budget as a meaningless exercise that will not give hope to Ghanaians.
According to him, the budget will not in any way improve the well-being of the citizens of this country, predicting harsher economic conditions for the people.
Contributing to a motion for the approval of the budget in Parliament, the former Deputy Minister of Finance and Economic Planning explained there will be more government expenditure and borrowing in the domestic market that will further increase prices of goods and services in the country.
Prof. Gyan-Baffour pointed out that the projections in the supplementary budget indicated government was going to borrow excessively from the domestic market and crowd out the private sector which would impact negatively on the economy.
The private sector, he pointed out, was already facing ‘difficulties with power outages, difficulties with non availability of affordable credit, difficulties with poor and expensive transportation and cost and we going to add increasing rate because of the crowding to that effect. Mr. Speaker, this government has failed the people of Ghana woefully and it is time for them to pack and go.
‘It tells us that life is going to be very difficult for Ghanaians. All the economic indicators are trending in very dangerous deficits. Our growth rate is projected to decline from 8 to 7.1 percent even with oil. If you take oil out, it will even drop to 6.6 percent which implies that the almighty oil is only growing at 0.5 percent.
‘This is very disturbing. Prices of goods and services will continue to increase by the day. Inflation, according to the Minister, will rise to about 16 percent and government will continue to overspend, increasing the budget deficit from 8.5 to 8.8 percent despite all the claims of fiscal prudence and better Ghana. Mr. Speaker, this supplementary budget is a needless exercise,’ he noted.
Finance Minister Seth Emmanuel Terkper last Wednesday requested for the parliamentary approval of GH¢3,196,855,671 as supplementary estimates to finance government’s expenditure for the remaining half of the 2014 financial year.
The minister indicated the amount had become necessary as a result of some revisions made to the revenue and expenditure estimates in the 2014 budget which had led to an overall budget deficit of GH¢10,128.1 million or over GH¢10 billion.
However, Prof. Gyan-Baffour pointed out that the problems facing the economy were more structural and could not be resolved with text book fiscal and monetary policy prescription.
‘Because it is structural, you cannot just manipulate the open market operations just to try and stabilize the economy. For example, forex exchange depreciation cannot just be resolved by throwing more foreign currencies on the open market. Mr. Speaker, the depreciation has more fundamental cause. The demands for foreign exchange far exceed the supply – as simple as that.
‘So, Mr. Speaker, the problem is that the solution is to find a way to reduce the demand constantly and to increase the supply,’ the former deputy finance minister suggested.
He said the issue had become more serious because government had refused to process crude oil at the Tema Oil Refinery.
According to him, government would not have spent so much foreign exchange to import finish petroleum products if it was importing crude as former was causing the country to lose US$20 on each barrel of finished crude oil imported into the country.
‘Instead of bringing in crude oil at say US$100 a barrel to be processed by the Tema Oil Refinery, equivalent quantity is brought in finished product at about US$120. Mr. Speaker, the effect is that for every barrel, you lose US$20 that could have reduced demand for dollars. Mr. Speaker, assuming we import one million barrels of finished crude oil, it means that we are throwing away about US$20million which could have been saved if we brought in crude and refined by Tema Oil Refinery’, Prof. Gyan-Baffour pointed out.
Also contributing to the motion, MP for Obuasi West Kwaku Agyeman Kwarteng said the government’s demand for GH¢3.2billion supplement budget indicated the economy was in trouble.
He slammed government for always insisting the economy was robust and that the challenges would be curtailed with some strategic interventions highlighted in its 2014 budget statement and economic policy.
He said the unfolding events have proved that the economy was rather retrogressing due to the failure of those measures.
‘Mr. Speaker, the summary of all these is that the economy is much more troubled that the government itself imagined at the time the minister presented strategies for us to approve. So, obviously, those strategies have failed’, Mr. Kwarteng who is also a member of the parliamentary select committee of finance stated.
He said the content of the supplementary budget showed that economic activities expected to generate jobs for the rest of the year would be much slower than imagined with the growth rate of goods and services expected to decline.
What is even more worrying, according to Mr. Kwarteng was that the country is expected to overspend its budget by GH¢1.6 billion with tax revenue also expected to slump by 16.3 percent.
Again, the strength of the Cedi against major international trading currencies is also expected to continue to fall with interest payments also expected to rise because of government’s continuous borrowing from both domestic and international markets.
‘What we heard as strategies going forward were all recycled lip services. These old recycled lip services are those that have plunged as into the economic difficulties as we find ourselves now’, he said.
He entreated government to be conscious about prudent management of the country’s scarce resources and spend wisely within its means.
However, Employment and Labour Relations Minister Haruna Iddrisu, argued that despite the economic challenges, the government was optimistic that there would be a turnaround due to the pragmatic measures it was putting in place.
Moving the motion for the approval of the supplementary budget, Haruna Iddrisu who is also the MP for Tamale South said even though the performance of industry had not been the best due to erratic power supply, the measures being pursued by the government would help address the problem.
He said to help alleviate poverty, the government intends using part of the US$1.5billion Chinese loan to support Youth Enterprise Development Fund that will stimulate growth in the economy.
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