Do Away With Subsidies – Franklin Cudjoe

Franklin Cudjoe
Franklin Cudjoe, Founding Director of IMANI Ghana, a policy think-tank, has called for the discontinuation of government subsidies on commodities due to its fiscal imbalances.

Speaking at a roundtable discussion on the theme, ‘Revisiting the fuel subsidy debate: crossroads, hard choices’ organised by Citi Fm, an Accra-based radio station, Mr Cudjoe stated: ‘Government is broke and there is no doubt about that. School feeding is in arrears and fertilizer subsidy has not been paid for some time. So, the last thing that one would want government to do is to impose subsidy on fuel. If you really want to do subsidy, then that should be done through social economic interventions like transportation.’

Chief Executive Officer (CEO) of PEF, Nana Osei Bonsu also shared similar sentiments.

According to him, the introduction of subsidies into the petroleum sector by Government to reduce hardship on the poor and vulnerable was an exercise in futility since that was rather messing up activities of the private sector.

Emphasizing that there was no reason for subsidies, he said even if government had the resources, it should use that to improve the lives of the vulnerable in the Ghanaian society.

He added that Government has mismanaged the whole process and wondered why it indicated sometime back that it had weaned itself off subsidy arrangement, only to realize that it did not.

‘When you subsidise a product, you skew the market pricing mechanism and there is no resource to pay the people you are crediting from. So what has happened is government has piled up the differential that they have accumulated as subsidies, only to turn around and say there is no money. How are we (private sector) going to pay the difference that has been accumulated, which also comes at a cost because there is an interest portion accumulated on it?

Government introduced the automatic adjustment pricing system in the petroleum sector in 2011 to eliminate its fuel subsidy programme but has not been able to walk its talk.

‘Government should wean itself off all subsidy arrangements because they don’t have the resources to pay for them. If it does not, then it should not accumulate this subsidy, which is actually credit and bring it back tomorrow at extra cost,’ he said.

By Samuel Boadi