GHANA IS COLLAPSING!
By Stephen Odoi-Larbi & Fatima Adam
The continuous rising cost of living, unemployment, and the astronomical increase in government expenditure over the last four years, has provoked the minority New Patriotic Party (NPP) in Parliament to call the ruling party, National Democratic Congress (NDC), to sit up and fix the economy.
“The high cost of living is taking its toll on all of us, and justifiably, public sector workers are demanding a pay rise from government. Standards of living are falling; life is becoming unbearable, and our people are getting poorer. Public financings are out of control, and the economy is in trouble,” argued the Minority NPP. According to them, Ghana was collapsing, and the earlier measures were put in place to rescue it, the better.
The Minority NPP made this observation in its ‘True State of the Economy’ at a media briefing in Accra yesterday.
They were led by their leader, Osei Kyei-Mensah-Bonsu, who addressed journalists in a 33 page report that captured some key sectors of the economy, including Food, Agriculture and Cocoa; Trade, Industry & Tourism; Education; Health; Roads and Transport; Environment, Science and Technology and Housing.
They also touched on Employment; Decentralisation and Local Governance; Human Rights, Constitutional and Legal Affairs; Judiciary, Women and Children, Youth and Sports, Electoral Commission, Security and Foreign Affairs.
Mr. Kyei-Mensah-Bonsu, who was flanked on his left hand side by his Deputy, Dominic Nitiwul, and on his right by Baffour Awuah, said evidence of the state of the economy could be found in the everyday lives of the people; in the industries; markets and in the streets.
The President, John Dramani Mahama, in his message on the State of the Nation, delivered in Parliament on February 20, 2013, had assured the nation of good times ahead, despite the difficulties being experienced within some sectors of the economy, which was having a rippling effect on the ordinary citizenry.
But, the Minority in their ‘True State of the Economy’ address, said there could only be good times ahead when the government stops its excessive spending, stops competing with the private sector for money domestically, stops borrowing unnecessarily and unreasonably, ensure growth in the food, agriculture and cocoa sub-sector and other sub-sectors of the economy, as well as ensure equal educational opportunities and facilities for all.
Mr. Osei Kyei-Mensah-Bonsu said despite the NDC’s cry of inheriting a total public debt of GH¢9.5 billion at the beginning of 2009, it had done nothing to reduce it, but rather worsened the situation.
He said available records indicate that as at the end of the 2012 fiscal year, the country’s public debt had escalated to the tune of GH¢33.5 billion.
“It means that every year, from 2009 to 2012, the NDC-led government added GH¢6 billion to our public debt, 55% of which was borrowed domestically. At Ghana’s current debt, each of us owes GH¢1,340,” Mr. Osei Kyei-Mensah-Bonsu noted. “The current public debt,” he argued, “does not include the US$3 billion Chinese loan.”
Notwithstanding the above mentioned record, the Minority Leader was quick to add that the fiscal deficit of the country had reached an unprecedented level of GH¢8.7 billion, equivalent to 12.1% of GDP, as a result of the government spending in excess of the income the nation generated.
He described the figures as the highest recorded deficit in the history of the country. He said in 2012, the government’s spending increased astronomically to 34.5% of GDP, even though government revenues amounted to 16.1% of GDP for the year.
These excessive spending, Mr. Kyei-Mensah-Bonsu alleged, went to finance the purchase of vehicles, laptops, sewing machines, sound systems, and the many things the NDC lavishly distributed around during the elections.
The country’s stock of arrears at the end of 2012, he noted, had also increased to a whopping GH₵5.4 billion in 2012 from a GH₵1.8 billion at the end of 2008.
The amount, according to the Minority NPP, includes amounts owed to the Ghana Cocoa Board (COCOBOD), Social Security and National Insurance Trust (SSNIT), Ghana Education Trust Fund (GETFund), District Assemblies Common Fund (DACF), National Health Insurance Scheme (NHIS), and road contractors among others.
“As a result of the huge fiscal deficit and arrears, the international credit rating agency Fitch has downgraded Ghana’s credit rating from B+ stable to B+ negative,” Mr. Kyei-Mensah-Bonsu noted.
Commenting further, Mr. Kyei-Mensah-Bonsu said the much-touted single digit inflation achievement by the NDC was a hoax, arguing that the current lending rate of 30% does not match the inflation rate of 8.8%.
“Government must abandon this single digit inflation propaganda, stop borrowing unnecessarily and unreasonably from the domestic market, and let interest rates drop, so that businesses can borrow and create jobs. People need jobs, not propaganda. People want prices on the market to be genuinely stable. Government must listen to the concerns of the people,” the Minority Leader charged.
Touching on growth of the economy, the Minority NPP said the country was now growing more slowly than in periods when there was no crude oil.
According to the Minority NPP, the economy grew by only 7.1%, despite the coming onboard of crude oil. It argued that the situation was not the best for a country, whose management, under John Agyekum Kufuor without oil in 2006, 2007 and 2008, grew by 7.6%, 7.5% and 8.4%.
It said Ghana was gradually shooting itself to catch the Dutch Disease, since proceeds from the oil export were not being used to grow the economy, therefore, leaving it in total stagnation.
Food, Agriculture and Cocoa
Commenting on the Food, Agriculture and Cocoa sub-sector of the economy, the Minority NPP said not much had been invested in this sector to ensure food security, and therefore, charged the government to act urgently to save the situation.
According to the Minority NPP, real growth in agriculture had consistently nose-dived from 7.4% in 2008 to 0.8% in 2011. The share of agriculture in total budgetary allocation, the Minority NPP added, had fallen steadily from 3.0% in 2009 to 1.9% in 2012, a situation, they argued had resulted in reduced food security for consumers, and low productivity and income for farmers.
On matters relating to the energy crisis being witnessed across the country, the Minority NPP said it was shocked that the government had till date not been able to curtail the situation, despite the numerous promises it made in its party manifesto in 2008.
Mr. Kyei-Mensah-Bonsu said the factors inhibiting the free-flow of power, were within the control of the NPP and, therefore, expressed worry why Ghanaians kicked them out of office.
“We know that gas is cheaper than light crude, but if your source of gas supply is not secured, what is important is to improve on the liquidity of VRA to procure the alternative light crude oil. The NPP government used to support the VRA to procure light crude oil at a cost of about US$40 million every month.
“This support was withdrawn by the NDC government. This, in addition to about US$400 million of government’s indebtedness to the VRA, has crippled the company and made it difficult to procure these fuels for power generation,” he explained.
With regard to the recent increase in petroleum products, the Minority NPP blamed the NDC for the mess created, and accused it of suspending the planned Tema Oil Refinery expansion project initiated by Mr. Agyekum Kufuor, when in office.
According to the Minority NPP, the shortage of liquid petroleum gas (LPG), arising from TOR’s lack of refining crude, may appear to be a side issue, but the bigger matter lies in the four-year well-calculated NDC scheme to grant finished products lifting permits to the Oil Marketing Companies (OMC) and Bulk Distribution Companies (BDC) owned by NDC gurus.
It said the need to expand TOR and recapitalise it was not only appropriate, but urgent.
To the Minority NPP, despite the rhetoric of government machinery making much noise about creating jobs for the teeming unemployed youth, the picture of the unemployment situation appears to be far worse in 2012 and 2013, than it was in 2008.
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