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General News of Wednesday, 28 May 2008

Source: The Chronicle

Kufuor Has Said Nothing New - NDC

Barely a week after the President announced some mitigating measures to cushion Ghanaians against the shocks of the increasing crude oil and food prices, the opposition National Democratic Congress (NDC) has virtually ridiculed the decision. In a statement issued and signed by the party’s General Secretary, Johnson Asiedu Nketia yesterday, the NDC described the measures as less than convincing since according to the party...,

it was full of self adulation of having achieved macro economic stability and a resilient economy amidst claims of prudence in managing the national economy

This, it said was evident in the reactions of Ghanaians after the announcement.According to the NDC, the broadcast by President Kufuor clearly showed a failure to formulate appropriate policies, especially, those related to agricultural.It is the considered view of the NDC that the abolition of duties on rice, yellow corn, wheat and vegetable oil do not immediately lead to lowering of prices of those items on the Ghanaian market since according to the party, importers have no control over prices in the importing countries.

Considering the fact that global food prices are likely to continue to rise due to supply difficulties brought about by weather conditions, energy prices and increased demand.The NDC was not sure whether the NPP government was perhaps unaware of export bans imposed by some countries to protect food stocks which could drive up prices. “New imports will not necessarily reach the Ghanaian consumer at cheaper prices. The benefits of the removal of these duties will therefore accrue to importers and dealers only”, it emphasised.

It also expressed belief that the decision to remove taxes and duties on imported vegetable cooking oil was not well thought out since according to the party, Ghana has installed local capacity to produce enough vegetable cooking oil to meet national requirements, saying that local producers have already been reeling under the unfair competition posed by imported cooking oil.It therefore noted, “the removal of taxes and duties on this product will therefore lead to a collapse of the local vegetable cooking oil industry with a consequent retrenchment of labour at a time we need to create more jobs.”

With respect to subsidy on fertilizers, the NDC believes that it was long overdue, stressing that the subsidy on tractors, the beneficial effects are bound to be medium to long term. It also expressed reservations about the fact that some development projects are likely to suffer as a result of policy failures of government, through these interventions, leading to unemployment and further suffering of Ghanaians.

According to the NDC, an Atta Mills government will take advantage of the fund set up by the United Nations (UN) to support farmers in poor countries producing less because of high fertilizer costs and energy. “We will also take advantage of the US$1.7billion programme to help countries with food deficit to buy seeds. In addition, we will consider measures to provide quicker and more flexible and financing for agricultural production. We will also consider cheaper and more efficient energy supply to irrigation projects nationwide”, it stated.

Further, the party noted that an Atta Mills government will remain cognisant of the issues of trade distorting agricultural subsidies which impacts negatively on developing countries and climate change which is impacting on food production.It also recalled that in the year 2001, President Kufuor and the NPP stated in their first budget statement presented to Parliament that their “…first priority is to reduce rice importation by at least 30% in value from the approximately US$100million spent on importing rice annually to supplement local production. The reduction in rice importation will be substituted by local production of 72,000mts, and create jobs to rural incomes.”

Contrary to this promise, the NDC stated that today, the country’s rice imports exceed 500,000mts, with a value of almost US$400million. The party thus identified the Aveyime Rice Project as part of measures it instituted to make the country self sufficient in rice production.At the time of its establishment in 2000, it noted that domestic production accounted for 45% of our national requirements, and Aveyime was targeted at raising the domestic production to over 60%.

Three months into its assumption of office, the NDC said the Kufuor administration abandoned the project and opened the floodgates for massive importation of rice. Within a period of two years, it noted that local production reduced by half to account for only 21% of national requirements, stressing that further declines in output have been reported since 2003.The consequence of this according to the NDC, was evident in the near collapse of the local rice industry, with thousands of rice farmers having been thrown out of work.

“The decision to re-launch the project seven years down the line at a higher cost has come too late and smacks off short-sightedness. We hope the NPP has learnt a useful lesson that no purpose has been served criminalising agreements or projects entered into by the NDC administration especially when opportunities exist to review and correct perceived flaws without denying the nation of the intended benefits,” it emphasised. It is the position of the NDC that the NPP government has no right to claim that the increase in world market price of crude oil has thrown its budget off gear since according to the party, the NPP government policy on petroleum prices has been one of full cost recovery.

“Week after week, as the prices of petroleum rose on the world market, prices of petroleum products have been increased in Ghana with the full cost including the tax component passed on to the Ghanaian consumer,” it stressed. For the NDC, President Kufuor and his NPP government should have anticipated increases in world crude oil prices since local and international analysts had long predicted it. “It was therefore very short-sighted on the part of government to have assumed a petroleum price of $85 per barrel as the basis for its 2008 budget when even at a time the budget was being prepared, crude oil prices were pushing the $93 mark and were forecasted to exceed $105 before mid year”, it noted.

It however, hastened to add that Tema Oil Refinery (TOR) should not be in debt at this time. Since December 2003, the NDC said the NPP government has collected ¢5.2 trillion under the debt recovery levy it imposed on Ghanaians.“According to a letter from the Bank of Ghana’s office, an amount of ¢4.2 trillion is still outstanding. Since the original debt was ¢4.36 trillion, we have reason to believe the NPP government has misapplied the TOR debt recovery levy. The NDC demands that the government accounts for the non payment of the TOR debt”, it emphasised.

That notwithstanding, the NDC cautioned the NPP government not to use the recent oil find in an anticipated revenue as a convenient excuse to shirk its responsibility from the problems of today. “Ghanaians are in dire straights and the least they expect from the NPP are serious measures to tackle the current debilitating economic conditions. We are of the view that the recent mitigating measures announced by the President are ‘one Pesewa too little, one day too late.”