?222 Billion Missing!

Another financial scandal, which borders on criminality or negligence, has hit the opposition National Democratic Congress (NDC). This time it involves ?222 billion which was siphoned from the Educational Trust Fund.

The amount was part of the total of 2.5 percent VAT collected in 2000 for the Fund, but was under declared in the 2001 budget.

In 1999 the NDC government garnered public support and increased the VAT rate from 10.0 percent to 12.5 percent, with the objective of using the additional revenue for the Educational Trust Fund.

The NDC government convinced the public that the increase from 10.0 percent to 12.5 percent was equivalent to a "2.5 percent increase". However, some economic analysts have disclosed that the increase was actually 25.0 percent, a difference of 2.5 points (not percent). The analysts contend that 2.5 percent increase would have raised the VAT rate from 10.0 percent to 10.25 percent. The actual 25.0 percent increase in the VAT translates into 20 percent of all VAT collections. For instance, under the old rate of 10 percent, a purchase of ?100,000 would attract ?10,000 VAT. However, under the new rate of 12.5 percent, a ?100,000 purchase would attract ?12, 500. The additional ?2,500 meant for the Educational Trust Fund represents 20 percent of total VAT intake. Based on the projected VAT intake, an initial ?200 billion was announced under the medium term expenditure framework in the 2000 budget for the Fund.

Overall, the government recorded a VAT intake of ?1,272.1 billion for fiscal year 2000, which was slightly higher than the ?1,263 billion projected in the 2000 budget. All things being equal, the government should have paid ?254.4 billion, being 20 percent of ?1,272.1billion into the Fund. Surprisingly, only ?32 billion or (2.5 percent) was reported in the 2001 budget as having been deposited in the Educational Trust Fund. There is therefore a shortfall of ?222.42 billion in the Educational Trust Fund. Equally surprising is the fact that not even the original ?200 billion was met.

The legitimate question that flows from this irregularity is, where did the money go? Was it used for the 2000 elections?

The shortfall could be an error by the new Minister of Finance or deliberate under-funding by the NDC government, with the hope that Parliament would not detect the shortfall. Somehow; it escaped all 200 Members of Parliament.

This anomaly raises fresh questions on the capability of Parliament to monitor the country's expenditure and put the breaks on embezzlement and misappropriation of public funds. It also opens a new chapter in the stinking financial scandals that have rocked the NDC since it bowed out of power on January 7, 2001.

More scandals are in the pipeline.