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General News of Wednesday, 8 May 2013

Source: The Al-Hajj

Nana Addo stirs fiscal crisis

According to the nephew of the defeated presidential candidate of the New Patriotic Party (NPP), garrulous Gabby Asare Otchere-Darko in a recent analysis, his party’s challenge of the 2012 presidential election results was not about logic, but a well-hatched plan to deny President Mahama the political comfort and the economic space to operate smoothly in his first term.

This bleak prognosis from the head of the leading conservative but partisan think tank in the country, the Danquah-Institute, is gradually taking shape in its real manifestation in the nation’s exchequer in the first quarter of the fiscal year 2013 and potentially the days and months ahead.

Ghanaians, especially those at the lower echelon of the social and economic ladder should, therefore, brace themselves up for a potential belt-tightening and austere life akin to what is happening in the countries of the Euro-zone, in the coming days regardless of the outcome of the election petition.

Two broad reasons could be assigned to this worrying economic situation the infant Mahama-led administration is currently grappling with: election year economic and political uncertainty and post-election legal, economic and political uncertainty brought about by the stubborn refusal of the political opposition to accept defeat and allow the state to move in peace.

Although a majority of Ghanaians have given thumps-up to the ongoing presidential petition before the Supreme Court of Ghana, especially its live telecast on the national television and other media outlets across the country, major economic indicators for the 2013 fiscal year show that the economy is badly bleeding with a concomitant huge financial cost all Ghanaians should be prepared to bear in the coming days and months, regardless of the outcome of the Supreme Court petition.

Fiscal and current account deficits have deteriorated, inflation is on the ascendancy and has actually moved out of the single digit zone it used to be in the last thirty months; interest rates have trended upwards and Cedi, the national currency, is only reliant on the buffer provided by the huge reserves at the central bank but not on the economic fundamentals.

Added to the above are the uncertainty and the jitters the on-going Supreme Court case is creating among the investor community and the visible but alarming decline in local productivity, as more and more workers (in both public and private sectors) prefer to stay glued to their television or radio sets viewing or listening to the proceedings in court than actually working to add on the nation’s productivity and development.

With this seeming fiscal crisis and problems with the public finances, Gabby and his cohorts in the NPP, together with the petitioners have somewhat succeeded in getting what they wanted: to use the electoral petition to create mass disaffection for the government, especially in the area of economic management and later turn around and blame it for incompetence.

The Al-Hajj can confirm that beneath the unending pouring of glowing accolades on the nation as a beacon of democracy in the sub-region of West Africa by the international community, following the decision by the opposition to challenge the result of the 2012 presidential elections at the Supreme Court; is also the creation of a big hole in the 2013 Budget and the gradual manifestation of serious fiscal slippage and imbalances that could potentially derail all the aspirations of the government in its Better Ghana agenda, at least for 2013.

A government document stumbled upon by The Al-Hajj on the economic assessment of the infant Mahama-led administration in its first quarter suggests that, revenue and grants projected for the first quarter of the year were far and alarmingly below target, a development that adds more oxygen to the above allegations and raises the bar of sinister tactics employed by Nana Akufo-Addo, and his henchmen in the NPP to derail the forward march of the nation and create more hardship among Ghanaians.

The gap in the first quarter data is so huge that government finds it very difficult to meet a lot of its payment obligations with respect to public services including those relating to contractors, suppliers and other providers of public services.

Oblivious of the economic challenges created by the Supreme Court petition, heads of Ministries, Departments and Agencies (MDAs) are in constant bust up with the Ministry of Finance (MOF) and its officials over the ministry’s inability to advance their annual budgetary allocations to them in time for them to carry out their programs and projects for the year.

According to one recently sworn-in sector minister who wants to remain anonymous for fear of being accused of undermining the government, “even our Administration and Goods and Services allocations are in abeyance, how are we expected to run our ministry? We cannot buy stationery much more think of carrying on with our infrastructure program for the year. We are surely in a total mess, but let us hope it gets better in the coming days.”

A senior economist and financial analyst, who wants to remain anonymous pinned the blames of this calamitous situation on the economy on the pending electoral case at the Supreme Court engineered by hardline remnants of the Danquah-Busia-Dombo tradition led by the defeated but obstinate 2012 flagbearer of the opposition NPP, Nana Addo Danquah Akufo-Addo.

According to the renowned economist, due to the uncertainties arising out of the ongoing presidential election dispute, government’s target in the tax and non-tax revenues, as well as loans and grants for the first quarter (January-March) has seen sharp dip. This worrying development the economist predicted will continue to, further derail the economy and create huge fiscal chasms as long as the case at the Supreme Court remains unresolved and protracted.

Per the Mahama administration’s financial policy and budget statement presented to Parliament earlier this year by the Finance Minister, Seth Terkper, the government was expected to raise a total of GHC 22, 533.4 million as revenue for the 2013 fiscal year; while it was also expected to spend GH¢ 30,544.3 million this same year.

However, receipts from tax and non-tax revenues accrued to government for the first quarter of this year according to our sources at the presidency is nothing to write home about, a situation that is highly attributed to the economic uncertainties and distractions brought about by the current election stalemate occasioned by the refusal of Nana Akufo-Addo and his NPP to concede defeat to the incumbent President, John Dramani Mahama.

Whiles some members of the NPP who believe in the wicked agenda of using the court case to sabotage the ruling government continue to be coolly enjoying a jolly ride, the current situation, cast doubts on whether the government will be able to trim down the fiscal deficit of 12 percent for last year to 9 percent by enhancing tax revenues and controlling expenditures as promised in the 2013 budget.

The International Monetary Fund (IMF) in its latest assessment of the economy cast doubt on government’s ability to trim the deficit to 9 per cent in fiscal year 2013 as promised, predicting an end year deficit of 10 per cent for the country.

More so, whiles the court case continues to cripple the revenue generation measures of the ruling government as outlined in the 2013 Budget, the Mahama administration is beset with huge spending obligations as a result of salary arrears accruing from the implementation of the Single Spine Salary Structure and payments to contractors, suppliers and providers of other public services.

Ghana's huge budget deficit for 2013 has been a source of constant worry to its development partners and financial analysts, and this latest challenge could pose serious concerns on the strength of the currency and prospects for long-term growth in this emerging oil economy.

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