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Opinions of Friday, 13 March 2009

Columnist: Otchere-Darko, Gabby Asare

A Better Ghana Needs A Better Budget

Prof Mills often said during the campaign that NDC would not depend on the expected oil revenue to fund his party’s promise to bring about a better Ghana. Yet the details of his first budget (misnomerly named ‘Investing in a Better Ghana’) gives very little clues as to sources of funding for the push for a better Ghana.

This year’s spending programme has a lot to be modest about. It is a mere 2.7% more than that of 2008. With average inflation target of 15.3%, this year’s budget will actually be smaller than last year’s. All the talk about savings (GH¢4 million from “the rationalisation of ministries” from 27 to 23; from cutting down protocol budget – foreign travels, workshops and conferences - GH¢70m) is made nonsense by the single largest significant budget increase: that of the Presidency – from GH¢110m in 2008 to GH¢290m. So you save GH¢74m and lose GH¢180m! It begs the question: what exactly are the Castle and its annex going to do with all that money?

The government would have to explain why the Office of Government Machinery deserves a 163% budget increase when ministries such as Justice (and Attorney-General) and Interior – two areas crucial to fighting crime – are receiving huge spending cuts.

The only one obvious area of hope is the Ministry of Food and Agriculture, which will have GH¢202.6m to spend – 133% more than last year. Kwasi Ahwoi has a big opportunity to make the Mills government succeed and our agriculture, too. If he fails the NDC experiment at bettering Ghana fails.

But for the next two years, Ghanaians should not expect to see any real signs of the Better Ghana promised. The budget itself admits as much on page 47, where is states: “For 2009 in particular, and the medium term in general, the Government will be committed to correcting the large fiscal imbalance experienced since 2006 by focusing on, among others, tackling underlying issues to enhance domestic revenue mobilisation; rationalizing subsidies to State-Owned Enterprises (SOEs), particularly, in the energy sector; and rationalizing public sector wages and other expenditures”.

Yet Prof Mills promised voters in his manifesto that there shall be no increases in taxes, going further to exempt specifically taxes that directly affect income, such as VAT and PAYE.

Rather than large subsidies for lifeline consumers of electricity (GH¢19 projected this year), the government seeks to reduce utility prices through efficiency! He also promises to strengthen the independence of the PURC. This may be good news for the World Bank and Ghana in the long run, but for the Ghanaian who expects her cost of living to improve today, this means utility prices can only go up.

Winston Churchill said “The best argument against democracy is a five minute chat with the average voter.” A seemingly snobbish thought from an upper crust mind. I was reminded of this quote in a sotto voce conversation with a PhD student at the SOAS (University of London) library last month. After highlighting the achievements of the NPP she sighed with angst, citing as the latest cause of consternation what seemed to her an obsession on the part of the new government with the seizure of cars. Her problem was in ‘struggling’ to understand why Ghanaians would vote out the NPP and in the NDC. My response was that ‘small things matter in liberal democracy under a very poor environment, where ‘ignorance’ is an art.” She walked to her seat with a conceding, pondering look, clutching her copy of Robert Calderisi’s ‘The Trouble with Africa’.

My sister, who was visiting Ghana during the run-off, recalled riding in a taxi where she not only had to endure the domineering odour of a driver who chooses to exercise without restrain his freedom not to use deodorant, but his pardonable ignorance, as well. Navigating the Akufo-Addo Circle, by the Togo Embassy, the driver commented: “Wo-aah look… The man is not yet President and he has a Roundabout named after him!”

My sister thought she was educating the driver when she corrected him that the Akufo-Addo, whose statute was in the middle of the Circle, was the former President and one of the Big Six. But the driver would not be moved.

My take on it when she recounted this tale was that the driver chose to be ignorant because it was convenient. The propagandist may call it the expediency of selective ignorance. The maxim ignoramus et ignorabimus meaning "we do not know and will not know", is really at the heart of what this culture of partisan-induced ignorance in Ghana is all about. Now, there are those who, eaten up by their hardship, were genuinely taken in by the false populist campaign of the NDC, voted for them and are now eagerly awaiting their share of earthly deliverance. Then there are also those who use ignorance as an excuse to love one and despise the other.

On TV3 News at the weekend a message from a viewer read to the effect that the 2.8% reduction in the price of diesel will benefit every Ghanaian because fuel touches all of us and that it would make lives better for the ordinary Ghanaian. This same person has conveniently forgotten that even when fuel prices were reduced, 10%, 5% and another 5% in the weeks before December 2008, the commercial drivers did not find the reductions significant enough to be passed on, until the 17% or so post-Dec 7 reduction which, though significant was conveniently used against the NPP.

President Mills on Thursday, through his Finance Minister, showed Ghanaians how a campaign promise can be fulfilled in appearance yet hopeless in substance and even counterproductive in its consequences.

Starting from today, a gallon of petrol will sell at GH¢3.51 from GH¢3.69, representing a drop of 5% and diesel will sell at GH¢3.89 from GH¢4.00 representing a 2.8% decrease. We are told by the Finance Minister that these reductions, however insignificant, translate into annual losses to the exchequer of about $60 million (based on current crude oil prices). That is about one-fifth of HIPC debt relief inflows this year and more than twice what would be distributed through the District Assemblies and MPs from HIPC funds (GH¢26.47) to finance “activities aimed at reducing poverty and improving the economic and social conditions of Ghanaians.”

It appears the flagship social intervention programme on the face of the 2009 budget is the provision of free school uniforms for a planned 1,665,644 pupils in public basic schools. That whole programme is projected to cost GH¢11.7m. Even after enjoying a 50% budgetary increment this year, the Capitation Grant is less than GH¢23m. Ghana government’s contribution to the School Feeding Programme this year is GH¢17m.

The NDC, focused on cutting down costs, has put on hold its promise to expand the lunch-per-pupil programme to cover all basic schools.

Yet just imagine what that GH¢60m from reducing excise duties on fuel products could have done for real people fighting real poverty? That GH¢60m dash on fuel prices would be as useful for alleviating hardships as sprinkling a bucket of water on an Olympic size pitch under a hot African sun is for keeping it green and soft.

A better Ghana could only be a possibility with a better budget than the one we have been given this year.

The author is the Executive Director of the Danquah Institute, a think tank that promotes the libertarian conservative ideas of Dr J B Danquah and others.