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Opinions of Monday, 23 February 2004

Columnist: Asibey, Akwasi

Mahama?s "Budget Blues": A Tissue of Lies!

I have read Mahama?s critique of the read the 2004 Budget Statement and Economic Policy.

There was nothing illuminating about the piece. I thought it was prepared to score political points with the credulous. He would have sounded more credible had he focused on an analysis of the structure and constraints of the economy and the limited policy constraints any political leader face in attempting to respond to the myriad of demands and pressures.

As a nation, Ghana does not generate sufficient wealth to spur socio-economic development. And it is this reality that challenges every finance minister.

That the NDC could not transform the economy despite the fact that it was in power for almost two decades, if the PNDC period is factored in, clearly underscores the need to be circumspect when discussing the economy.

As a political leader, I would have expected Mahama to be a bit more thoughtful with his statement on the economy. Let us start with his analysis of inflation. He was very right in stating that the increase in petroleum products undermined the government?s effort to curb inflation. What he failed to admit though is that the debt at TOR was clearly not sustainable. Had the Kufour administration failed to act, the economy could have collapsed. So how would NDC have dealt with the debt over hang at TOR?

His position on the proposed deregulation of the petroleum sector is not informed by facts and by international experience. There are countries in sub Saharan Africa such as Kenya that have deregulated their petroleum industry and, yet have been able to control inflationary pressures.

On the national debt stock, he provided selective information to denote that the situation has become unmanageable since the NPP came into power. This is nothing but a tissue of lies! Firstly, by going HIPC, the country has been given the opportunity to use savings that would have otherwise been spent on servicing both domestic and external debt to spend on social programmes. Is it such a bad policy? Secondly, the restructuring of the domestic debt by issuing special bonds has lessened the potential damage to the economy and not worsened it.

And the 2004 Budget Statement clearly shows that the domestic debt load is declining not increasing!

The facts still show that it was sensible for Ghana to go HIPC. In the final analysis, the benefits outweigh the costs!

Mahama lost face by agreeing with Moses Asaga that the GDP growth rate was ?doctored? and went ahead to quote a faceless economist that according to this economist, ?the more acceptable figure conservatively is estimated at 4.9%?. Characteristically, Mahama did not present a shred of evidence to show how his economist arrived at this figure.

Yes, the estimated GDP growth of 5.2% is not bold enough. However, the Finance Minister is just being prudent, which is a sensible approach. This does not preclude the fact that the target could be surpassed.

More importantly, Mahama seem to suffer from amnesia. If not, he would have written about how the entire country was humiliated by IMF. This was because the NDC government, which he was part of, cooked figures to qualify for drawing rights. Does Mr. Mahama remember this episode? The newly elected NPP government had to return this money that was several millions of dollars!

As a nation, Ghana will continue to grapple with the difficult challenge of generating sufficient revenue to meet its development obligations. Certainly the financial gap of US$ 400 million that Mahama gleefully talked about should be a concern for all Ghanaians.

Nonetheless, the Kufour administration is very much aware of this challenge and has initiated trade and economic policies to arrest the situation.

And they should have been applauded and not condemned as Mahama sought to do in his piece.


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