The presentation of this year’s budget, “the 419 Budget”, has coincided with significant turbulence in a critical macro-economic indicator such as the exchange rate. Only days ago, the international financial news outlet, Bloomberg, reported that the Ghana Cedi was the worst performing currency in the world at the moment, having slumped by 6% in the first month of the Akufo Addo/Bawumia government.
As you may be aware, H. E. President Nana Addo Dankwah Akufo-Addo in his State of the Nation Address delivered barely a fortnight ago, promised that details of the many promises contained in the NPP manifesto of 2016 and those he personally made on the campaign trail will be presented in the Budget and Financial estimates by the Finance Minister.
Pursuant to the above, we on the Minority side and we believe all Ghanaians, adjusted our minds to hearing in very specific terms, details of how the exceptionally weak Ghana cedi will be strengthened and how the following key promises and commitments made by the President will be implemented and or most importantly financed:
1. Absolutely free Senior High School education for ALL SHS graduates starting from September this year;
2. Payment of all contractors owed within the first 100 days of this government (ending 17th April, 2017);
3. One Dam in each of the over 6,000 villages in the Northern, Upper East and Upper West Regions if we are to accept their later rendition of the scope of this promise which was initially proposed for every village in Ghana;
4. The restoration and payment of nursing and teacher trainee allowances (an estimated GHC 637.2 million per annum) for the 2017 fiscal year without compromising gains made in increasing enrolment since 2013.
5. Provision of a total of US$275 million (GHC 1,292,000,000) for disbursement to all 275 constituencies for the 2017 fiscal year not as a deduction from the already existing District Assembly Common Fund.;
6. Establishing a factory in each of the 216 Districts of Ghana;
7. Payment of all customers of DKM, ‘God is love’ and other victims of micro-finance swindles;
8. Providing jobs for the teeming unemployed youth of Ghana;
9. Significant reduction of electricity tariffs and transport fares through the removal of the Energy Sector Levy, reduction of Corporate tax from 25% to 20%, 3% Special import levy, removing import duties on raw materials and machinery for production, reducing drivers insurance levies and cost of licence and reducing taxes on companies which employ graduates to reduce graduate unemployment among others; and
10. Doing these without borrowing since ‘all the money needed for these programmes’ according to the tone and manner of their campaign could be realised in the country.
A key expectation of this budget in light of the confusion that arose in the Akufo-Addo government in the wake of the Heritage Fund debacle, was that, very specific sources of funding for the implementation of the promises made by the party on the campaign trail especially on the issue of Free SHS.
Ladies and gentlemen of the media,
We note that the Finance Minister refrained from the unfortunate propaganda that other leaders of the NPP use to do, especially Vice President Mahamudu Bawumia, when it comes to discussing the economy even though his references to his family was needless. He rightly acknowledged the significant contributions made in the management of the economy by the previous NDC government.
He also provided more accurate information to the market. This was however not sufficiently consolidated to maximise the gains on the economy.
MACRO-ECONOMIC STABILITY
A review of the macro-economic outturn for 2016 reveals significant gains made by the previous NDC government under President Mahama.
Inflation has been on a downward trend, falling from 19.2percent in March, 2016 to 15.4 percent in December, 2016. It was 13.3 percent in January 2017.
The declining trend in inflation over the period to a rate of 13.3% in January 2017 is wholly attributble to the base drift effect.
To this end, we want to state emphatically that the rate of 13.3% recorded in January 2017 is technical and has nothing to do with any policy initiative of the NPP government. For instance, in January 2016 prices of key components of the weighted basket name; electricity, water and petrol increased by 67%, 59% and 28% respectively. However, in January 2017 only the prices of petrol went up by 11.1%. Against this background, the month- on-month food prices went up by 5.8% in January 2016 but down nosed in January 2017 to only 3.3%.
The Treasury bill rate fell considerably from 24.5 percent in December, 2015 to 16.4 percent in December, 2016.
A Balance of Payments (BOP) surplus of US$247 million was recorded representing a vast improvement on a deficit of US$129 million in 2015.
A major improvement was also witnessed in the country’s trade balance from a deficit of US$1.7bn in 2016 compared to a deficit of US$3.1.bn in 2015.This was the result of an increase of 7.2 percent in exports receipts as well as a decline of 5.3 percent in imports.
The NDC government bequeathed gross foreign reserves of US$6,161.80 million, as at the end of December; up from US$5,884.70 million at the end of December 2015. This means that an additional US$277.07 million was added to our external assets. This provided an import cover of three and a half months.
The exchange rate of the Ghana cedi remained relatively stable. Overall, the Ghana cedi depreciated by 9.6 percent against the US dollar and 5.3 percent against the euro. It in fact appreciated by 10.0 percent against the pound sterling in the interbank market in 2016.
Ladies and Gentlemen of the Press,
This relatively strong performance has virtually been eroded as the Ghana cedi has lost about 6% of its value against major currencies since the Akufo Addo/Bawumia Government took office just over a month ago. Today the rapid fall of the Ghana cedi is the most pressing concern for many small scale and large scale businesses.
Their profits are being eroded away with each passing day and Ghanaians are also bearing the repercussions of this state of affairs.
The Finance Minister, failed to outline clear policies to address this important issue afflicting the Ghanaian economy today i.e. -the near-uncontrollable fall of the Ghana Cedi which is now considered the worst-performing currency in the world. This is especially regrettable in view of the stability the Ghana cedi enjoyed in the 2016 fiscal year under the NDC’s agenda for transformation. Again this is regrettable because this budget stifles exports and stimulates imports. A situation which will impact negatively on the manufacturing sector, industries as a whole, accelerated job creation and a stable currency.
Ladies and Gentlemen,
We call on the Akufo Addo/Bawumia government to as a matter of urgency and in the national interest take immediate steps to halt this worrying decline in the value of the Ghana cedi.
We note that most of the macro-economic targets set by his government are in tandem with and represent a continuation of the work began by the immediate-past NDC administration.
The Finance Minister pegged GDP growth projections for 2017 at 6.3% which is significantly lower than the 7% projected by leading international finance organizations like the World Bank and IMF.
The projection however validates the gains made by the NDC administration in taking corrective measures against the fiscal slippages in 2012 and setting the country on a path of economic stability through massive investments in critical sectors of the economy including the oil and gas sector.
With regards to the budget deficit recorded in 2016, the Finance Minister’s explanation or causes namely- lower than expected oil and gas production, absolves the NDC of claims of “mismanagement” and “reckless expenditure” by President Akufo Addo in his State Of The Nation Address.
BROKEN PROMISES
Ladies and Gentlemen of the press,
Despite the departure of the Finance Minister, Hon Ken Ofori Atta, from the usual propaganda of the NPP on the economy led by Vice President Bawumia, his presentation fell short of what was required to demonstrate that the NPP will meet the promises made in their 2016 manifesto and on the campaign trail.
Contrary to assurances by President Akufo Addo in his maiden SONA that the Budget statement will flesh out in substantial detail, the many promises he made in 2016, many of these promises have been broken or are being programmed to be broken.
President Akufo Addo promised to:
• Pay all arrears owed contractors in the first 100 days of his administration. This was not captured in the budget;
• Pay all customers of DKM, God is love, Jasper Motors among others who lost monies as a result of the microfinance scams in the Brong Ahafo region in particular but no mention was made of it in the budget;
• Reduce corporate tax from 25% to 20% but this was not captured in the budget;
• Remove import duties on raw materials and machinery for production, reduce drivers’ insurance levies and cost of licence; and
• Immediately reduce electricity tariffs and transportation fares but this was missing in the budget.
This can only mean a betrayal of the trust of significant sections of the Ghanaian people who may have been affected by these issues and may have taken a chance to bank their hopes on this government. These Ghanaians are fast losing hope in the Akufo-Addo/Bawumia government.
In addition to this, a number of promises that the government sought to fulfil do not appear to have been adequately budgeted for. Neither was information on the sources of the required funds for their implementation revealed. Notable examples are the “Frees SHS”, “One District one factory”,” One Dam One Village”, “One Constituency, one million dollars” mantra.
FREE SHS DECEPTION
Ladies and gentlemen of the press,
There was clear deception in the budget statement read by the Finance Minister yesterday regarding the much-trumpeted Free SHS programme. President Akufo Addo insisted during the election campaign that he would make SHS education instantly free for ALL JHS graduates once elected.
What this simply meant was that at least an amount of GHc3.6 billion would be provided for in the budget to cater for the needs of an estimated 840,000 SHS students due to be in school in the 2016/2017 Academic year.
Paragraph 575 of the Budget Statement however paints a completely different picture and tells a tale of total deception. The paragraph in question states that ONLY first year students in the 2017/2018 academic year, whose number is given as 467,692 at page 102 of the budget will benefit from the programme.
The budget is also completely silent on the President’s promise in his speech at the Okuapeman Senior High School in the Eastern Region, a couple of weeks ago that All Day Students will be fed once a day. The Day students and their parents were expectant and have been disappointed by this twist of events.
Even as this clearly amounts to a monumental deception, it completely vindicates the position of the NDC administration at the time that the most viable option towards the implementation of Free SHS is the gradualist approach under the Progressively Free SHS programme introduced in the 2015/2016 academic year. What the NPP has proposed in the budget is Progressively Free SHS under a different name.
In fact, SHS students especially continuing students were better off under the NDC’s Progressively Free SHS as opposed to the Akufo Addo/Bawumia version. Under the NDC, a total of 320,000 day students from first to third year benefitted from Progressively Free Education. In the 2016/2017 academic year another 120,000 targeted boarding students from deprived communities were roped into the programme. This meant that all year groups were fairly represented as against the decision by the Akufo Addo/Bawumia government to leave out hundreds of thousands of continuing students in their second and third years of study in all Senior High Schools in Ghana.
We note even more worryingly that neither a cost nor a source of funding was put to this programme save for a vague mention of the limited Annual Budget Funding Amount (ABFA) from our petroleum receipts and “other domestic revenue sources”.
We are however aware of a figure of GHc 400 million being bandied around by some members of the NPP’s communication team as the total cost of the programme. If this proves to be true, it would be inadequate to cater for even one term of Free SHS. This is a serious issue and we demand immediate clarity on the subject in order to avoid confusion, frustration and anxiety for students and their parents come September this year.
In lieu of this, let President Akufo-Addo admit that his promises on Free SHS were not properly thought-through and make the necessary arrangements to explain why a different approach to what was promised is being adopted.
CAPPING OF STATUTORY FUNDS
Ladies and gentlemen,
It was patently clear in the budget statement that the Akufo Addo/Bawumia government has no magic wand to conjure the sort of creativity required to generate additional resources to finance the many promises they made to Ghanaians.
To mask this glaring deficiency, the Finance Minister in his budget statement hid behind so-called “rigidities” to launch an aggressive raid on statutory funds. The Minister proposed in the budget statement to cap statutory fund payments at just 25% of revenue in order to remove ‘rigidities’ in their allocation.
This is only an euphemism for the diversion of badly needed money from the District Assembly Common Fund (DACF), GETFund, NHIS, GIIF etc. to finance the ‘One this! One that!! campaign’ mantra of the NPP. This goes contrary to their campaign promises which cemented the view and raised hopes that these promises were to attract new and additional funding.
Such diversions will have disastrous consequences for vital sectors of the economy like Education, Health, and provision of social infrastructure. Funds like GETFund, NHIS and DACF have become the lifeblood of respectively Education, Health, Sanitation and other sectors of our national life. These funds even at the current rate of receipts from government are constrained by severe financing gaps leading to difficulties in meeting their obligations. We note that unlike previous governments, The Akufo-Addo/Bawumia government for “Families, Friends and Financiers” being property owning democrats and rigidly pursuing their interest, is having minimal regard for the social sector which immensely affects the poor and downtrodden the most. But this should not continue.
The GETFund since its inception by the NDC administration has become the mainstay of infrastructure provision as well as meeting commitments at all levels of education. Reducing the amount of funds allocated to it as is envisaged under the so-called capping arrangement by the Finance Minister will compromise access and quality of education at all levels.
The Akufo Addo/Bawumia government must be reminded that education in Ghana goes beyond just the second cycle level and all levels require adequate funding in order to have a robust and comprehensive education system which is relevant and responsive to the country’s human resource needs.
We hasten to add that even the Free SHS programme in its current hazy state would not survive if adequate provision is not made to accommodate the massive increase in enrolment expected in view of the decision to merge SHS education with basic education.
This is more so when no clear provision has been made in the budget for the continuation of the Community Day SHS started by the President Mahama administration.
Available evidence shows for instance that even with the release of all budgeted funds to the NHIS, only about half of the cost of healthcare is met leaving a major financing gap which needs to be made up for through additional financing options. This shortfall has often led to delays in payments to service providers. Any further cuts to the NHIS will sound the death knell for this important intervention and must not see the light of day.
The District Assemblies Common Fund (DACF) is the primary source of funding for the activities of Districts in the country.
People with disability derive their share of the DACF and they deserve it. These funds are also critical for the provision of badly needed amenities in various communities as well as the management of sanitation. It is obvious that the attempt to cut the fund is a backdoor channel aimed at raising resources from the DACF to finance President Akufo Addo’s “one million per constituency” and “one District, one factory” promises made in 2016. Why must the districts be short-changed, why must people living with disability suffer cuts in their share of the DACF to suit the NPP’s deceptive campaign promises?
The NPP is clearly attempting to engage in a bizarre manoeuvre under which it will cut funds meant for development in communities from a statutory fund and channel same into poorly-conceived programmes also meant to provide communities with amenities. It is a vivid example of the famous expression; “robbing Peter to pay Paul”.
Ladies and Gentlemen,
The NPP is just robbing Peter to pay Paul. In the end nothing new would have been done save the diversion of monies from one fund into another to achieve the same purpose.
Furthermore, the one million dollars per constituency promise treats all constituencies as having equal landmass and population hence assumes that they have the same needs.
This is a clear manifestation of policy confusion and contradiction. More importantly, it shows that the NPP’s deliberately evasive posture towards demands for them to indicate the sources of funding for their many lavish campaign promises has caught up with them. They are clearly at their wits end in terms of finding money to deliver on their lofty promises and have resorted to this elaborate gambit.
This proposal is bewildering in view of the fact that delays in statutory payments was a major criticism that the NPP levelled at the then NDC administration. This proposal to cap statutory fund payments will completely lead to a collapse of many sectors of national life.
This must be a major source of concern for all Ghanaians and we all need to demand that the Akufo Addo government leaves our statutory funds alone and look for alternative funding sources just like they were forced by sensible public outcry not to touch the heritage fund.
IMINENT SALE OF NATIONAL ASSETS
The finance minister hinted ominously in the budget statement at the continuation of an NPP tradition of carving out state assets and selling them whenever they are cash-strapped. Just as they did in the case of Ghana Airways Co. Ltd., Ghana Telecom etc. He indicated that GHC 1.8 billion is to be realised from the divestiture of some state assets.
Though specific details of the assets in question were not disclosed, coming on the heels of statements by first, the President and subsequently the Finance Minister that VRA and GRIDCO are to be listed on the stock exchange, we are inclined to believe that this government covets these major state utilities and is bent on selling them off to private interests.
In the interest of transparency and accountability the Akufo Addo/Bawumia government must provide more information on which state assets they intend to sell to raise the said GHC1.8million. The resort to selling of state asset itself is further proof of a lack of innovation on the part of the current managers of the economy and at variance with their suppositions and claims in opposition. For this is a cheaper and lazy route to innovative governance.
POWER OUTAGES
Ladies and gentlemen of the press,
The country has recently witnessed prolonged power cuts popular known as Dumsor. This is in spite of adequate measures put in place by the estwhile NDC government to address the problem.The NDC government undertook the largest and quickest mobilization of power generation capacity in Ghanaian history thereby affording the nation enough generation capacity. Far reaching measures were also put in place to guarantee fuel security. We have noted that the NPP government which is clearly smarting under public discontent over the power cuts has sought to blame the previous government.We wish to make it clear to the NPP that the recent power cuts are entirely their doing and responsibility especially when viewed against the backdrop of boastful claims by then Vice Presidential candidate Bawumia that Dumsor was a financial problem and not a technical problem.
Expected increase in crude production from TEN and Sankofa with upstream Petroleum expected to grow by 39.6%. It is surprising that notwithstanding the huge reduction in the development cost SGN, the budget still quotes $9.80/months. Since gas price is dependent on development cost, we urge government to go and renegotiate as per the Petroleum Agreement to ensure a competitive power sector.
The reduction of Public lighting levy from 5% to 2% is a red hearing. This and National Electrification Scheme levy do not exist in Law. These levies were repealed by the Energy Sector Levies Act (Act 899). It is surprising that the Budget intends reducing a levy that does not exist.
The budget statement offered no clear cut measures to guarantee to deal with the recent setback in power generation and this is most worrying.
SECTORAL PERFORMANCE
A review of the performance of important sectors of the economy as contained in the budget statement re-affirms the vision of the immediate-past NDC government under President Mahama.
Virtually all gains made in the various sectors stem from unprecedented investments made by the NDC government. These investments in water provision, housing, roads, communications, health, education, agriculture, transportation among others represent the largest such investments and have eased life considerably for our people.
Furthermore, almost all the projects mentioned in the budget which are set to begin were either initiated by the NDC government or funding for them were sourced under the same government.
Examples of these include (and the source of these projects and programmes is the budget statement itself):
• Phase one of the Anomabo Fisheries College to enhance research and knowledge-base in fisheries technology for all operators;
• The Ghana Commodities Exchange (GCX) project; and
• the Marine Drive Tourism Investment Project covering the over 240 acres of land from Osu Christiansborg Castle to the Arts Centre.
Ladies and Gentlemen,
Also:
• Having increased the total installed generation capacity by 880MW in 2016, the total of 1227MW of installed capacity due to be added in 2017 were all started under the NDC. These include: 370MW AKSA project, 107MW GPGC project, 350MW CenPower Project and 400MW Early Power Project among others.
• Having completed the Sekondi to Takoradi via Kojokrom section of the Western Rail Line and ensured completion of Feasibility Studies and Front End Engineering Design (FEED); for commencement of work on The Western Line; which starts from Takoradi and terminates at Kumasi with two branch lines namely; Dunkwa to Awaso and Kojokrom to Sekondi, covering a distance of 340km, the verdict is clear about who did what.
• The Greater Accra Metropolitan Area (GAMA), Kumasi and Cape Coast water extension projects . The Kpong, Akim Oda and Ho water expansion projects, Tono Water Treatment project, the Yendi Damongo and the Wa project, preparatory works for the Sunyani and Techiman as well as the Sekondi-Takoradi water supply projects had also started.
• In 2016, routine maintenance activities were undertaken on 10,723.49km (90 percent of the approved work plan) of the trunk road network; 16,183km (72 percent of the approved work plan) on the feeder road network; and 9,384km (94 percent of the approved work plan) on the urban road network.
In addition to this the following projects had either commenced or funds had been found and Parliamentary approval obtained by the NDC government:
• Construction of a bridge on the Volta River at Volivo
• Nsawam – Apedwa Road(Kwafokrom – Apedwa Road)
• Tamale – Yendi Road
• Bolgatanga – Bawku – Polmakom
• Nkwanta – Oti Damanko Road
• Oti Damanko – Nakpanduri Road
• Berekum – Seikwa Road
• Enchi – Dadieso Road
• Kasoa Interchange and Ancillary Works
• Dualisation of Ho Main Roads
• Construction of Ho Bypass
• Construction of Obetsebi Lamptey Interchange
• Construction of Pokuase Interchange
• Kumasi Roads and Drainage Extension Project
TAX RELIEF MEASURES VIS A VIS REVENUE MEASURES
Ladies and Gentlemen,
We acknowledge the effort by government to remove a number of taxes to create space for the private sector. These measures could however have the opposite effect on the economy in view of the lack of corresponding revenue measures to compensate for the loss of revenue that will occur.
The only notable revenue measure is the policy on scrapping some tax exemptions granted to some firms undertaking projects in Ghana. It must be noted that the amounts of tax exemptions for projects especially those undertaken through borrowing are deducted from the cost of the loans so removing the exemptions will only lead to an increase in the cost of loans and ultimately lead to an increase in the public debt.
For us the most important test of the effectiveness of these measures will be determined by a significant reduction in electricity and fuel prices as promised by President Akufo Addo, a significant reduction in price of spare parts for drivers and vehicle owners and subsequent reduction in transportation fares and a general reduction in the cost of living for every Ghanaian. Finally it must translate into employment creation for the teeming youth of our country.
ANTI CORRUPTION
It is instructive to note that the government’s anti-corruption efforts as outlined in the budget hinges on the National Anti-Corruption Action Plan (NACAP) which was developed by the NDC government. This is an attestation that the previous government took the right steps which the NPP government finds necessary to continue. We welcome their implicit praise and validation of our stewardship. But we wish to condemn their decision to review their entrenched position taken on sole sourced contracts in the past. The NPP condemned sole sourcing. The NPP must stick to their promise of near-zero sole sourcing and not a threshold approach which allows for sole sourcing up to GHC50 million. Let’s face it, how many single government contracts in Ministries, Departments and Agencies are equal to or above GHC50 million? This is a back door approach to saying, ‘we were wrong, let it continue because we have seen the light, that sole sourcing in and of itself is not wrong’.
In conclusion ladies and gentlemen of the media,
The “419 Budget” presented yesterday by the Finance Minister failed in many ways to prove that the Akufo-Addo/Bawumia government has a well-thought out plan to move our country forward. The mere repetition of campaign slogans and mantra without corresponding action plans backed by unambiguous cost measurements and financing plans does little to convince the people of Ghana that this is a government that can be relied upon to redeem its legion of promises.
It is still early days yet and it remains to be seen what direction the ship of state will be steered in. The anchor is not holding. The Captain of the ship must wake up and re-design the funding sources for the many promises they made.
The initial direction is tentative and dogged by policy confusion and contradictions.
This is a government that in one breath laments the lack of fiscal space yet seeks to narrow the space further through borrowing.
This is a government that in one breath seeks to provide free SHS for all yet is clearly targeting only first year students in September this year.
This is a government that in breath promised Day Students at the SHS level one free meal a day and yet has patently refused to comment on it in its budget.
This is a government that in one breath promised to reduce tariffs to alleviate hardships and has so far not taken bold steps to achieve this.
This is a government that in one breath promised to reduce Drivers Insurance levies and cost of vehicle license yet has so far remained mute on these.
This is a government that in one breath promised to create jobs and as yet has ensured that:
• 205 employees of the National Service Scheme have been dismissed;
• 8,634 Nurses who had received financial clearance and had been employed in various public health institutions have been thrown out of their jobs;
• 265 Police recruits who had reached advanced stages of training including weapon handling have had their dreams of entering the police service crushed by an unreasonable decision to dismiss them;
• 525 National Security personnel have also been shown the exit and asked to go home; and
• Have displaced many workers and immediately replaced them with NPP apparatchiks without due process, with several others still sitting on tenterhooks not for any wrongdoing, but just because the worst fears of Ghanaian workers akin to Apolo 568 has resurrected and revisited them.
Ladies and Gentlemen,
Yesterday, the august house of Parliament was subjected to another rendition of the “Family, Friends and Financiers” government of President Akufo-Addo. It was as unnecessary, irrelevant and misplaced as it not only gave an inkling into the mind-set of the current NPP government, but also reflected the Akyem “Family, Friends and Financiers” hegemony that Akufo-Addo government seeks to establish. But that will be left for another day.
Ladies gentlemen,
These contradictions account for the policy confusion alluded to earlier and we will be watching closely from the vantage point of a responsible party that has had the experience of managing this country in order to hold the feet of this government to the fire of accountability to ensure that the mandate given to them by the good people of Ghana is not squandered.
The debate on the budget next week will offer greater opportunity for us to highlight our views on many other aspects of the budget.
Thank you for coming.
