Feature Article of Thursday, 10 September 2009
Columnist: Appiah-Kubi, Kojo
KOJO APPIAH-KUBI, (PHD)
The NDC government has requested Parliament of Ghana in its just released mid-year review of the Budget Statement Economic Policy to approve additional resources to enable it to ”… address the inadequacy of the amount of monies approved under the 2009 Budget”. To the Minister of Finance and Economic Planning, the current economic woes that bedevil the nation are due to the fact that “… the NDC Government inherited a rundown economy characterised by severe imbalances”. Indeed this statement is a serious one and thus provokes the question “How run down was the Ghanaian Economy as the end of 2008?
In the first place it should be seen as highly improper for a no mean a person like the Finance Minister to describe an economy like Ghana to the whole world as a “rundown economy”. And this same person goes outside the country to woe potential investors into the country. How does he expect any serious potential investor to invest in a rundown economy? Ironically it was the same person who at the beginning of the year warned his people to be wary of loose talks about the economy because “money does not like bad talk”. Such loose talks have contributed to make the Ghana Stock Exchange lose about 50 per cent of it index ratings and the cedi about 33 per cent of its value to the dollar in only 8 months of NDC government.
The continuation of such loose talks about the economy, the nuances used and the language in which the mid-year review was written, give the impression and allows one to conclude that either the Minister wanted to please somebody or the NDC has still not realised that it is the ruling government and not in opposition or still campaigning for elections. And that Ghanaians want them to continue improving the economy from where the NPP left off rather than playing the blame game and doing politics with the economy. Indeed the NDC government should count itself blessed, because never before since independence has any new government inherited start chances better than that of 2008 and which the current NDC government inherited from the NPP. The state of Ghana as at the end of 2008 was not and never that of a rundown economy. Indeed the truth is that the economy is robust and resilient as the NDC government truly made the World Bank to believe when it presented its case for financial assistance. It only faces challenges amidst a global financial turmoil and world wide economic recession. In any case which economy does not face challenges? What is needed are sound economic policies and not blame game or politricks.
To the careful reader the Supplementary Budget does not present anything new and does not give any indication for a better Ghana soon as has been promised by the NDC. It is once again a manipulation of figures and a presentation of half-truths. It is also disingenuous and mischievous on the part of the minister.
The minister in page 4 misleads Ghana and the whole world that Ghana’s “… overall budget deficit including divestiture receipts would have been in the threshold of 24.2 per cent of GDP if the arrears and commitments had been taken into account”. This statement apart from being improper to have come from a Minister of Finance is also totally misleading and wrong. It is improper because it is serves no one any good rather than to destroy the internationally acclaimed good image of Ghana as a frontier emerging market economy worthy of attracting increasing international investor interests and en route to achieving its desired middle income status ahead of schedule in 2015.
The statement is totally misleading and wrong. The budget deficit is a cash balance which results when cash expenditures exceed cash receipts of the government at a particular point in time. It is always estimated on the basis of the cash concept of government accounting and never are arrears or commitments considered. In any case if the Minister wants to consider these arrears and commitments why does he not include them in the estimation of the current budget deficit? By this estimation the budget deficit for the mid-year 2009 should then be about 20 per cent of GDP and not 4.5 per cent as the minister wants us to know.
It is also disingenuous, mischievous and wrong on the part of the minister to give (on page 4) the overall budget deficit including divestiture receipts as 24.2 per cent, because it is not true. Appendix Table 3 D of the main 2009 Budget Statement gives the budget deficit including divestiture receipts as 11.5 per cent GDP and 8.1 per cent excluding divestiture receipts. In the Supplementary Budget, however, this same budget deficit including divestiture receipts has been given as 14.5 per cent of GDP. This indeed constitutes manipulation of figures to play politics to the gallery of ignorant Ghanaians. On page 4 of the Supplementary Budget Statement the minister attributes the rapid depreciation of the cedi to excess expenditure. In March this year it was the same Minister who accused the Bank of Ghana with their cedi redenomination as having caused the rapid cedi depreciation. These inconsistencies show that the NDC government still cannot diagnose the ills of the economy to be able to make proper policy prescription for a better Ghana.
Another manipulation of facts also takes place on page 7 of the Supplementary Budget Statement. The minister asserts here that “… the trade balance amounted to a deficit of US$955.8 million”. However, this deficit is shown as a surplus in a conspicuous graphical presentation on page 8.
The Minister complains about a “huge debt” left by the previous government without any reference to burden of this debt on the economy. Using figures from page 13 of the Supplementary Budget, one can, however, estimate the burden of external debt servicing to be about 9.07 per cent of total receipts and that of domestic debt interest payments to be about 8.37 per cent for the first half year of 2009. Where is the unsustainability of the debt burden on the Ghanaian economy? Indeed these so-called high domestic debt interest payments are caused largely by the NDC government itself for issuing only short term government securities to borrow money for government spending, contrary to achievement of the NPP government for elongating the average maturity of government domestic debts. In any case in 2001 the then new NPP government was faced with domestic debt interest payments equivalent to 43 per cent of domestic revenue and total public debt service of almost 100 per cent of domestic revenue and this excluded the cost of rolling over the Treasury Bills. It did indeed face up to the challenge and managed to reduce the debt burden from 173 per cent of GDP to less than 48 per cent in eight years.
The minister boasts of having reduced the public debt stock from US$8,073.3 million as at the end of December 2008 to US$7,841.3 million as at the end of June 2009 without telling Ghanaians that this has been largely as a result of debt reliefs, which the previous NPP government had applied for. The minister also talks about increased high court judgement debts over the last eight years due to bad governance. What he fails to acknowledge is that these court judgements were in respect of commissions and omissions committed under the previous NDC government.
Indeed the Supplementary Budget does not present anything new for a better Ghana and Ghanaians should feel disappointed, since the budget falls short of the right policy prescriptions required to prosecute an agenda for a better Ghana, which the NDC government has promised.
KOJO APPIAH-KUBI (PHD) Published in Daily Graphic