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22.02.2013 Social News

ISODEC slams fuel subsidy withdrawal

By GNA
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Accra, Feb 22, GNA - The Integrated Social Development Centre (ISODEC), has raised concerns over government decision to partially remove subsidies on petroleum products.

It says the decision short-circuit the ongoing public debate on the issue of fuel subsidy and breaches the good faith that ought to exist between the government and the electorate.

A statement signed by Mr Steve Manteaw, Coordinator (Economic Justice) of ISODEC and copied to the Ghana News Agency said on Thursday that last year, the International Monetary Fund (IMF) urged government to withdraw subsidies because it was missing its targets and crowding out expenditures in the priority areas of infrastructure, education and healthcare.

It said upon reflection it appears government decision not to implement the IMF advice at the time was borne out of political expediency than goodwill, saying 'such behaviour amounted to a betrayal of the people's confidence'.

The statement said in the view of ISODEC the debate has not been as open and fair as one would have wished because vital information that would have made the discussions more meaningful was withheld from the public.

It said for instance government was not open about the gains or losses made from the country's hedging of crude oil prices.

While government was loud on how much fuel subsidy was costing the State it was mute on how much petroleum taxes were been generated in terms of revenues and what the net surplus or loss between that and the subsidy was, the statement said.

It said the time had come for government to open up the petroleum pricing formulae for public scrutiny especially given the fact that many remain unconvinced that there was a subsidy.

'With the reasons given on the subsidy withdrawal government has presented its case as if the subsidy that it has now cut is money that is available,' ISODEC said.

According to the Centre the promise of better targeting the withdrawn subsidy is therefore nothing but a decoy to justify government decision.

'We reiterate our position that fuel subsidy withdrawal or reduction, without adequate impact mitigating measures will hurt the poor more than the rich and risks rolling back whatever progress we have made as a country in the macro economic sphere.'

ISODEC said the new price increases of petroleum products announced last Saturday would translate into higher transport fares and take up a higher percentage of the poor income than was the case before the increases.

It added that food prices, utility tariffs and prices of locally manufactured goods would go up as production costs rise in commensurate measure.

ISODEC noted that the developments are likely to lead to wage related agitations with their attendant destabilising effect on the macro-economy.

It said the new increases in prices of petroleum products are also likely to compound governments own budget for the consumption of these products, saying 'this calls for urgent measures to reduce abuses and waste in fuel allocations and use by State agencies'.

The statement noted that recognising that the budget is the single most important tool for national resource allocation 'we urge government to create greater opportunities for the people's participation in its formulation'.

'That way will be engendering a true national ownership of the policy choices made by government,' ISODEC said.

GNA

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