The National Democratic Congress (NDC), Minority in Parliament has alleged that Ghana is currently a high risk of ‘debt distress nation’ as result of its debt-to-GDP ratio and debt service ratio have both breached their required limits.
According to them, “Ghana’s debt stock in the last two and half years has increased significantly.”
Surprisingly, all the additional borrowed funds have been used for consumption which is posing a serious liquidity constraint for capital expenditure. That’s according to the minority MPs’ in a statement.
“In the face of this obvious challenge, the Minority cautions government to exercise restraint and curb its voracious appetite for borrowing”.
In the Minority’s caution statement signed by Ranking Member, Finance Committee of Parliament, to The Government on Mid-year Budget slated for Monday, July 22, 2019, Cassiel Ato Forson, stated that, “the weak performance of revenue has created further problems for government and undermining its ability to meet critical expenditure and commitments. This liquidity crisis is largely self-inflicted as it arises from populist and unrealistic fiscal measures adopted by the Akufo-Addo government. The Minority is cautioning government to quickly restore policy credibility”.
Below is the full statement:
MINORITY CAUTION STATEMENT TO GOVERNMENT ON MIDYEAR BUDGET.
The Minority in Parliament has learnt of the scheduled presentation of a Mid-Year review of the 2019 Budget Statement and Financial Policy of the Akufo-Addo government by the Finance Minister on Monday,22nd July,2019.
Pending a comprehensive review of the performance of the economy by the Minority in Parliament after the Minister’s presentation slated for Tuesday,22nd July,2019, we wish to state as follows;
1. It has been barely six months since Ghana officially exited the IMF program following board approval of government’s request for a waiver on critical performance criteria. Early warning signals after our exit show that our public finances are bleeding.
2. The Resident Representative of the International Monetary Fund (IMF) in Ghana, Dr Albert Touna Mama on 11th July 2019 at an IMF and Oxfam joint program in Accra described Ghana’s economic situation after the IMF exit as characterized by the following:
❖high risk of debt distress;
❖weak domestic revenue mobilization;
❖off-budget transactions; and
❖high level of fiscal risk from the energy sector.
3. Ghana is currently at a high risk of debt distress because our debt-to-GDP ratio and debt service ratio have both breached their required limits. Ghana’s debt stock in the last two and half years has increased significantly. Surprisingly, all the additional borrowed funds have been used for consumption which is posing a serious liquidity constraint for capital expenditure. In the face of this obvious challenge, the Minority cautions government to exercise restraint and curb its voracious appetite for borrowing.
4. The weak performance of revenue has created further problems for government and undermining its ability to meet critical expenditure and commitments. This liquidity crisis is largely self-inflicted as it arises from populist and unrealistic fiscal measures adopted by the Akufo-Addo government. The Minority is cautioning government to quickly restore policy credibility because our investors are keenly observing and will soon react should economy continuously show signs of distressed revenue position.
5. Off-budgeted transactions is yet another serious problem that can throw the entire 2019 Budget off-gear. The Minority is certain that this has resulted from the rushed implementation of populist and unsustainable campaign promises. If this practice should continue, the whole Budgetary process from now till the end of the year will be compromised. The Minority is cautioning government not to adopt the practice of replacing critical government expenditure with ill-advised spending on frivolous campaign promises.
6. A high level of fiscal risk from the energy sector has become a problem due to the Akufo-Add government’s heavy indebtedness to independent power producers (IPPs). The additional expenditure pressures from the IPP’s will significantly distort the fiscal deficit and may deteriorate the macroeconomic gains and derail market confident. The Minority is cautioning government to refrain from adopting an unconventional treatment of these liabilities in the fiscal as has always been their practice because we will closely monitor same from the books of government both at the Ministry of Finance and the Bank of Ghana. We call on government to act professionally and technically to avoid the accumulation of debt.
7. Last mid-year review saw a blatant breaking of the campaign promise not to heap additional taxes on the people of Ghana. The NPP government used the back door to increase VAT by 5%- a move which has heaped additional hardship on the people. It is the expectation of the people of Ghana, that such subterfuge and shenanigan will not be repeated in this mid year review.
8. Our position still remains. You can do all the propaganda about cosmetic deficit numbers, but the public debt will expose you.
9. Ghanaians are expecting a realistic Mid-year Budget that will address the hardships they are currently facing and not the announcement of populist, vote buying gimmicks.
10. Finally, Ghanaians expect the outright withdrawal/removal of the economically inefficient luxury vehicle tax
11. Thank you. Let’s work towards a prosperous Ghana.
CASSIEL ATO FORSON(HON)
RANKING MEMBER, FINANCE COMMITTEE OF PARLIAMENT
ACCRA
18TH JULY, 2019
Story by Edzorna Francis Mensah
