Indices Of A Mismanaged Economy & Sacred Cows
The negative indices are staggering; nowhere is any positive index discernible. It is a broad sea of red as far as the eyes can see.
Budget deficit projected GHc6.7 billion, actual GH¢8.7 billion; Shortfall in corporate taxes GHc708 million; Debt service rose by GH¢245 million due to high interest rate; Cedi depreciation 17.5 per cent, the highest ever at a go; Trade deficit, projected $3.1 billion, actual $4.2 billion; Excess spending on wages and salaries GH¢1.9 billion, and top-up on controversial subsidy regime GH¢339 million.
To stand any chance of introducing some green ink, the Bank of Ghana suggests fiscal consolidation based on “addressing the pressures related to wages and salary adjustments, utility and fuel subsidies and outstanding payments and commitments.”
Obviously, the government has accepted BoG’s recommendation of fiscal consolidation. But instead of adopting a holistic approach of tackling all the problem areas identified by the BoG at the same time, government has locked in onto the subsidies and playing the ostrich on the other necessary steps for achieving the needed fiscal consolidation.
If leakages in the economy need to be plugged, which does a serious manager address first, is the outflow which recorded a mere GHc339 million in a whole year or the one that gulped GH¢1.9 billion in the same period?
Yet government, like a clay-footed man, went for the 339 million subsidies, which is the line of least resistance. And now the poor housewife has to pay 50 per cent more for a 12.5 kg of gas, just to cook a meal!
Of course, one needs a lion heart to touch public sector salaries, given the ‘sharp teeth’ of the Trades Union Congress (TUC), and it does not appear we have any in this government.
But truth be told, the Single Spine Salary Scale (SSSS) is not the major culprit for the wage bill jumping from GH¢5.6 billion to GH¢7.5 billion in one year.
The government will not dare tinker with the wage bill because it is the gargantuan remuneration and mouth-watering perks that the Executive and the legislature rubbed each other’s back, and awarded themselves that has bloated the wage bill.
In other jurisdictions, it is people who have made their mark and fortune in life that go into politics to give something back to society for the opportunities that it had given them to succeed in life.
In Ghana the reverse is the rule. It is mostly struggling young professionals, who eke out a hands-to-mouth existence, who have nothing to give back, who flock into politics, seeing it as an escape route from poverty.
And why not? The gratuity they collect every four years is more than the pension that civil/public servants collect after over 40 years of back-breaking toil.
The Chronicle calls on the government to come out boldly and tell the long suffering Ghanaian why the other leakages occurred and how it plans the plug them. Why a shortfall in corporate taxes, for instance, in an era of increasing corporate profits?
The massive 17.5 per cent fall in the value of the Cedi last year is a major factor in the increased cost in bringing in petroleum products, the cost of debt servicing and the trade deficit. Management of the exchange rate is the duty of the Bank of Ghana.
The bank cannot be seen to fail in its duty and then turn round to call for the removal of subsidies the quantum of which its non-performance had contributed to.
The Chronicle, therefore, also calls on the Bank of Ghana to come out and tell Ghanaians how it intends to avoid a recurrence of such massive deterioration in the value of the Cedi.
Ghanaians are tired of institutions they fund but who continually fail to deliver and put them in jeopardy.
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