By Stephen Odoi-Larbi & Linda Akrasi
The ranking member of the Finance Committee and New Patriotic Party (NPP) member of Parliament (MP) for Old Tafo, Anthony Akoto-Osei has said the NPP, during its eight years in office, moved the country from a Highly Indebted Poor Country (HIPC) status to a Moderately Indebted Middle Income Country (MIMIC).
“In two years, the NDC government has moved us from being a HIPC country to a ‘MIMIC’ country? Mr. Speaker, they don’t understand the MIMIC. Mr. Speaker, the truth is that it is the Kufuor administration that has moved us from HIPC to a Moderately Indebted Middle Income Country.”
Mr. Akoto-Osei made this revelation in his comment to second the debate for the motion on the financial policy of the Government of Ghana, for the year ending December 31, 2011, which was presented in Parliament on November 18, 2010.
However, just before the commencement of the debate, the house was torn between whether the minority or majority side should commence the debate. After some minutes of deliberations, the house came to the conclusion that since it was the Finance Minister who moved the motion for the house to commence the debate, the minority should be given the opportunity to start.
This paved the way for the ranking member for the Finance Committee to make his submissions.
According to Mr. Akoto Osei, the chronological presentation of the budget on November 18, each year, had to be explained by the Finance Minister, saying “The Minister may have a special attachment with November 18.”
He argued that unlike previous budgets, the Minister did not start by reminding Ghanaians about what the government inherited in 2009 when they assumed office. “Ghanaians want to know what they inherited, and more importantly, what they are doing about it.”
According to him, a careful reading of the budget had revealed an unusual characteristic for a full disclosure of facts and figures, which reflect the true state of the economy.
In particular, the non-disclosure of the status of the net arrears accumulated in the fiscal year, 2010, leads to an assessment of the economic performance, which is totally different from the reality.
The Minority Spokesperson noted that the several instances of failed promises in the budget cause nothing but fear and panic. “Fear of being hit with higher taxes, and panic of further broken promises with no reliefs.”
He observed that the performance of the economy in 2010 had been worse than anticipated. First, approximation would be the evaluation of the economic target by the government, against the actual performance of pre-economic indicators.
On inflation, the member said the average inflation was targeted at 10.5%, and the end period at 9.2%, but the provisional numbers are that the average is 12.5%, as against 10.5% and the end period is 9.3%, as against 9.2%. “In other words, both inflation targets were missed.”
He recalled that the record of failed promises was not new, because in 2009, real GDP growth was targeted at 5.9%, but the actual was 4.1%.
He predicted that there was going to be a revenue shortfall in 2011. This, he said, was because in 2009, the government projected to collect over GH¢740 million in non-tax revenue, when in 2008, actual collections were only GH¢252 million.
However, contrary to Mr. Akoto-Osei’s submission, the National Democratic Congress (NDC) MP for Ketu North and Chairman of the Finance Committee, James Klutse Avedzi, said all the targets set by the NPP in 2008, when they were in power, were not realised.
According to him, real GDP growth, which was targeted at 7%, ended up at 6.2%, whilst end-period of inflation rate, which was targeted between 6% and 7%, ended up 18.1%.
He said International Gross Reserves, which was pegged at least three months of import cover by the previous administration, “ended up achieving 1.7 months of import cover.”
On the issue of budget deficit, Mr. Avedzi said the 4% target by the NPP in 2008, was also not achievable, as they ended up achieving 14.9%.
“Mr. Speaker, having failed woefully in the targets set by the NPP government at the time, we the NDC promised this country that when we come, we will resolve those problems,” he noted.
He outlined the performance of the NDC in 2010, saying inflation, which was 18.1% by December 2008, had now dropped drastically to 9.3 % in October 2010.
He said interest rate, which was above 30 percent by December 2008, was now around 22%.
“In fact, Mr. Speaker, the Bank of Ghana is now charging 22% of interest rate, and the bank’s prime rate is now 13.5%.”
That notwithstanding, Mr. Avedzi said the value of the cedi had appreciated against the foreign major trading currencies (US Dollar, Pound Sterling and the Euro).
“Mr. Speaker, by September 2010, the Cedi has appreciated against the US dollar by 0.1%, and it has appreciated against the Pound Sterling by 2.2%, but as for the Euro, the Cedi has appreciated against it by 5.4%,” he noted.