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Opinions of Thursday, 20 November 2014

Columnist: Akomfrah, Nii Armah

A Lame Duck Budget From A Lame Duck Government

A LAME DUCK BUDGET FROM A LAME DUCK GOVERNMENT – CPP

On the back of huge stresses in our economy - Petroleum price rises, utility price rises, galloping inflation, very erratic water and electricity supply, rising production costs to companies and industry, all of which makes it difficult to reduce unemployment and for employers to increase salaries to match inflation. Arrears to contractors and non-payment of other statutory payments.

Price rises in the system are staggering – Utility price rises up 76%, Producer prices up 48% in August, Transport costs are up, food prices are up. NEVER HAS OUR COUNTRY BEEN IN SUCH DESPAIR. The NDC government response is a "Lame Duck Budget" which offers no immediate solution on the water and electricity crisis, and rather adds to the burden on ordinary Ghanaians with a huge new tax rise on petroleum products. It's a do nothing budget from a do nothing Government. It's a budget of missed opportunities and missed targets.

We condemn the imposition of a 17.5% Special Petroleum Tax which adds to the hardship on an already impoverished majority.

The last Budget was dubbed a "Transformational Budget" which was going to "Rise to The Challenge". It failed miserably and has indeed transformed our economy for the worse. It is thus a farce for the Government to still be talking about having a Transformational Agenda.

MISSED TARGETS Real GDP - 8%, Actual 6.9% - Target Missed Inflation – 9%; Actual 16.9% - Target Missed Budget Deficit – 8.5% of GDP; Actual – 9.5% - Target Missed Industry – 9.1%; Actual – 4.6% - Target Missed Services – 8.9%; Actual 4.6% - Target Missed Revenue and Expenditure Targets both experienced shortfalls – Targets Missed

Much repetition of intensions with several missed targets and given that Government strategy has for six years been "to maintain Single Digit Inflation; ensure exchange rate stability; reduce the deficits significantly; and maintain high annual economic growth rates. Overall average GDP growth will be supported by strong infrastructure development, particularly in the oil and gas sector" the conclusion must be that Government has failed and their Economic Strategy is in tatters.

The national debt has reached a staggering 60.8% of GDP and speeding recklessly towards another HIPC .This will be bearable if Ghanaians can fully understand, see and feel the benefits. We are all aware of the bloating of the cost of the Ridge Hospital Works and thus many would question the huge cost of the projects listed as benefits of these astronomical loans.

The slow rate of disbursements of grants must surely be an indication of the confidence donors have in the Governments budgeting and how it spends money with nothing meaningful offered on anti-Corruption measures to inspire confidence.

Ghana, the land of plenty, blessed with gold, diamond, bauxite, manganese and an Oil Exporter still cannot keep its lights on and needs to beg to function.

In a country blessed with arable lands, plants of medicinal value, the benefit and potential of rivers and oil & gas, the most important resource of Ghana, her people, remains unemployed, hungry and thirsty in the midst of plenty, and the "LAME DUCK BUDGET" fails to tackle Unemployment in any significant way and with a growth now of only 3.9% for the coming year both Employed and Unemployed are in for a very rough year.

Our economy is cash-strapped and the Government is to blame for that perilous situation.

On International reserves of 3.3months of import cover, we remind the Government that given the country's vulnerability to commodity shocks, a cushion of four to six months of reserves is essential.

The Minister's announcement of achievements in the Water and Power sectors would seem to be having no effect on the ongoing abysmal performance of the water and power sector.

THE CPP POSITION

The CPP notes that we need to ensure that Ghana's growth which is now heavily influenced by mining and oil is meaningful and must not remain a measure of increased extraction of our resources and increased profits for foreign or off-shore interests.

Ebola remains a major threat for Ghana and the Government response taken together with that of Regional and Continental governments is inadequate.

The CPP has been calling for an alternative path which addresses the deficiencies of the budget with an increased investment in agriculture to feed the nation and build real food security, massive Industrialization linked with our rural economic activities. The NDC government's answers to our problems is rooted in the failing policies of the past. Their policy of stabilisation had included austerity measures such as expenditure cuts, freezing of employment, removal of subsidies, to bridge revenue and expenditure imbalances to attain the much coveted single digit rate of inflation. With inflation now galloping in double digits they no longer have a strategy and this is very apparent.

The deficits that underlie the weak cedi and our poverty persist. And the private sector in the manufacturing and agricultural sectors is either moribund or certainly not growing in capacity, capability, efficiency and prosperity to promote growth. The Government would seem to be managing the economy on behalf of others rather than Ghanaians for a fee that they use in running their electoral campaigns and buying political power.

The CPP notes that under-production and unemployment is the greatest impediment to our prosperity, and it is that which should be the target. Our development policy must be founded on the development of the productive resources of the country to satisfy domestic demand and export to achieve an internally sustained and balanced growth, full employment and prosperity. This will reduce our dependency on imports, reduce our trade deficit and generally reconstruct the colonial economy that has been inflicted on us.

The focus should be in food and raw material agriculture for import substitutes in our food processing and beverage manufacturing sectors. These can include - The production of corn, soya-bean, ground nuts, millet and sorghum to substitute hops barley and wheat in beer, flour, edible oil and poultry production, with a potential saving of at least $600m. The growing of bast-fibre for production of jute sacks. The beneficiaries of our intervention will be the farmers in bast fibre production. Ghanaian producers of the item will earn a minimum of $300m that is hitherto paid to farmers in Bangladesh and elsewhere. The cultivation of industrial sugar cane for the production of sugar, bio fuel and food grade ethanol. Current import expenditure for this item which exceeds $200m will be retained in the domestic economy for the benefit of our farmers. The promotion of production of roots and tubers to compete with imported rice consumption in the food sector. The cultivation of cashew, sheanuts and coffee to diversify our agricultural export commodity sector. The intensification of cocoa production and processing to meet current global supply deficits. The development of our brick and tile industry to develop our construction material resources and reduce the level of clinker imports. The country needs internally sustained balanced growth and development so that we can finally abandon poverty and find prosperity.

Nii Armah Akomfrah CPP Director of Communication www.convention peoplesparty.org