Government`s inflation brag is shortlived -Says ex-Finance Minister
THE National Democratic Congress (NDC) government's much-talked about appreciation of the local currency, the cedi, against the major currencies, is an ephemeral one which cannot be sustained, if some taxes introduced by the government in the 2009 budget statement become operational, the former Minister of Finance and Economic Planning, Dr. Anthony Akoto Osei, has predicted.
The New Patriotic Party (NPP) Member of Parliament (MP) for Old Tafo says he envisages a downward growth of the local currency against the dollar, if the government fails to properly handle the implementation of the newly-introduced taxes, such as the Driver and Vehicle Licensing Authority (DVLA) fees, passport fees and the motorway toll among others, which were approved by Parliament last Tuesday.
The year-on-year-on monthly inflation rate for the month of November, according to the Ghana Statistical Service, currently stands at 16.92, a 1.45 percent decrease from 18.04 in October, but the former Finance Minister has cast a great deal of aspersions over its sustainability.
Speaking on KESSBEN 93.3FM in Kumasi, the former Finance Minister noted that the slight micro economic stability achieved by the government, was merely due to the fact that the government itself had spent little this year, and also because oil price on the world market was still below $70, factors, which according to him, would favour any government of the day.
The NPP MP, however, expressed worry about the government's decision to introduce 20% taxes on all soft drinks, including the local dry gin, commonly referred to as Akpeteshie, in an attempt to raise more revenue for the country, indicating that the percentage rate was too astronomical, and could have devastating effects on the marketing of the products in the country.
He said it was regrettable that the government, in its desperate moves to generate revenue for the country, was resorting to such aggressive means, revealing further that the reason was due to the “cut-throat” $300 million loan agreement the government entered with the World Bank and the International Monetary Fund, at the beginning of the year.
“When the government decided to enter into this agreement, we warned them against it, but they did not listen, and now we are paying for the consequences,” he contended.
Dr. Akoto said past experience had proven that no government had ever survived through over-reliance on the World Bank and the IMF, stressing: “The fact that the two financial institutions had released only fifty percent of the loan facility several months after the loan agreement was signed, should tell you their level of commitment towards ensuring the economic growth of developing countries.”
The ex-Finance Minister further condemned the government's decision to set aside the whopping sum of GH¢200 million to service judgment debts, which are outstanding debts that past and present governments owe organisations and contractors for their services rendered to the nation in the past, contending that the decision could have serious consequences on the nation's economy.
He said even though he was not against the resolve to clear off the outstanding debts, the GH¢150 million earmarked for the servicing of the judgment debts in the 2009 fiscal year alone in particular, was not economically prudent.
“Nobody is against the idea to clear off debts the government owes organisations and contractors, but let us not make it a misplaced priority, you see some of these debts have been in our statutory books for years, so the best thing was for the government to have taken steps to service them gradually, so that unnecessary pressure would not be put on the economy,” he suggested.
“How can you set aside just ¢5 million as an endowment fund for public universities, and choose to allocate ¢200 million as payment for judgment debts, and also when the GETFund, Road Fund, Health Insurance Fund and other sensitive socially packaged funds were in arrears , this is a clear case of misplaced priority, “ he added.
The former Finance Minister was also not happy with the President Mills-led government's budgetary allocation to the Ghana National Fire Service (GNFS), describing the GH¢9 million amount as woefully inadequate.
The former Research Fellow at the Centre for Policy Analysis (CEPA) noted that judging from the vital services offered by the GNFS to the nation, their budgetary allocation was not commensurate with its operations.
The former Minister, who is also the Ranking Member of the Parliamentary Select Committee on Finance and Economic Planning, noted that the recent fire outbreak which destroyed the Foreign Affairs Ministry building should have awakened the government to the need to ensure that that GNFS was adequately resourced.
According to him, if the GNFS had been equipped with modern logistics, it could have managed the fire outbreak that hit the Ministry of Foreign Affairs, and other fire disasters that have destroyed property worth millions of Ghana cedis.