No More Loans! Terkper Backs Bawumia

After bashing the 2012 vice presidential candidate of the New Patriotic Party (NPP) Dr Mahamudu Bawumia for his recent comments on the state of the economy, the National Democratic Congress (NDC) Government yesterday painted a gloomy picture of the Ghanaian economy, announcing very stringent measures to put it back on its feet.

The Minister of Finance and Economic Planning, Seth Terkper, announced that contrary to a recent statement by President John Mahama that he would sink the country into deeper debt by borrowing more money, a moratorium had been placed on contracting loans.

Aside that, civil and public servants would also experience a salary-increment freeze, including a freeze on arrears.

DAILY GUIDE learnt that all government workers who have salary arrears and allowances to claim from the government purse may be pegged at just three months, with the rest being written off.

Letters for this draconian policy had allegedly been dispatched to some of the concerned workers' unions, particularly teachers, whose newly recruited members are being owed over 20 months in salary arrears.

Just last week, Dr Bawumia, a visiting professor of Economics at the Central University College, delivering a public lecture at the school, criticized government for spending beyond the budgeted limit, thereby contributing to the present economic mess in the country.

Dr Bawumia warned that until government cut down on its unbridled spending, Ghana would not get out of the economic doldrums.

His frank assessment of the economy caused tremor in government circles, with the President leading the chorus and saying that he was not yet out of borrowing.

Strong Signal
Some members of the Minority in Parliament had sent a strong signal that there would be chaos in the country if the government went ahead with its plans to put a freeze on increases in salaries of government workers in the face of sharp rising cost of living.

Mr Terkper had appeared in Parliament to re-affirm government's position to put a moratorium on public sector wage increases in 2014, as part of an expenditure rationalisation to help correct the fiscal and monetary imbalance in the economy.

But the New Patriotic Party (NPP) Members of Parliament for Dormaa Central and Sunyani West, Kwaku Agyeman-Manu and Ignatius Baffour-Awuah said the policy decision was a recipe for chaos on the labour front because of the sharp increases in electricity and water tariffs and constant increases in petroleum prices.

“Mr Speaker, if the Minister is saying there would be a moratorium on public sector wage increase, it would not be feasible or fair to the Ghanaian worker because every day we are seeing increases in fuel prices, water and electricity bills which are continuously eroding the effect of public wage throughout the year.”

The Minister, who appeared in Parliament to make an urgent statement on the state of the economy, accepted the fact that the economy was in serious distress and would therefore need the consensus of Parliament to help it back on its feet.

The minister admitted that there were fiscal imbalances in the economy, resulting from the fast depreciation of the local currency, the Cedi, rising interest rates and the adverse global environment on traditional commodity prices.

He said erratic supply of electricity also affected the manufacturing sector, eventually affecting the overall performance of the economy.

He also told Parliament that as part of the measures to address the sharp imbalances in the economy, there would be regular adjustment of fuel and utility prices to keep expenditure on subsidies within budget constraint.

Just yesterday, petrol price was hiked by 7 percent, with other petroleum products equally attracting increments.

Transport operators had already indicated their resolve to increase fares from today.

The minister said the government would also minimise waste in expenditure on goods and services and capital.

No Loans
According to the Finance Minister, there would also be a freeze on the award of new contracts and contracting new loans with a change in focus to pipeline items, adding that there would be reclassification and improvement in public debt management.

This ran contrary to last week's comment by President Mahama in Kyebi in the Eastern Region that he would borrow more loans for projects.

Ghana's loan to GDP is hitting an unprecedented 60 percent ratio.

Mr Terkper also indicated that government would process all its expenditures on the Ghana Integrated Financial Management and Information System (GIFMIS) and classify them under a revised Chart of Accounts for all government transactions.

The minister also admitted there were over-expenditures in compensations and personal emoluments as well as subsidies due mainly to the payment of arrears.

“We want to negotiate public sector wage adjustments subject to budgetary constraints and within a medium-term framework aimed at reducing the wage bill-to-tax revenue ratio progressively.'

The Minister of Information and Media Relations, Mahama Ayariga said the Finance Minister had been blunt on the state of the economy and that he was happy that the government had come to realise the consensus between the Minority and Majority on increasing debt portfolio, budget deficit, revenue mobilisation and wage management.

He deflated rumours that the government was going to implement programmes prescribed by the International Monetary Fund (IMF), stressing that the government had now come out with comprehensive measures to address the challenges the country was facing.

The NPP MP for Old Tafo and a ranking member on the Finance Committee, Dr Anthony Akoto Osei, for his part, commended the Finance Minister for being open and transparent about the economy, unlike certain officials in government who wanted a cover up.

He said it would be good for the government to bring a supplementary budget to address the imbalances in the economy and that the Minority was ready to cooperate with government to bring economic relief to Ghanaians.

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By Thomas Fosu Jnr