The Minority in parliament has cautioned government that the projected deficit target of 4.5 Gross Domestic Product (GDP) will be missed due to excessive expenditure.
Ghana’s fiscal deficit has been projected to go down to 4.5percent in 2018, according to the International Monetary Fund, but the Minority have expressed concern to achieving the target.
“The projected deficit target of 4.5 percent would be missed due to huge deviations in revenue and expenditure and the financial sector related cost”, Ato Forson, ranking member on Finance told the gathering at a special roundtable breakfast dialogue on the Mid-year Economic Performance and Projections-the Minority’s Perspective in Accra.
His comments also comes ahead of a mid-year budget review by Finance Minister, Ken Ofori Atta on Thursday, with alleged increment in the existing VAT rate and other tax increases.
According to Ato Forson, government is accumulating arrears and sweeping them under the carpet, there is also a prior decision by government to cut down expenditure up to an amount of GH¢850 million on already-starved key sectors of the economy purposely to make enough savings to meet the demands from specific expenditure.
He also added large fiscal slippages are being created by the government’s inability to raise the needed additional revenue to meet the unrealistic promises that are increasing expenditures.
Furthermore, the Minority also disclosed that government intends to follow through a plan of raising GH¢3.8billion from selling state assets, prepayment of license fees, and monetization of mineral royalties.
“The Public Debt is expected to increase further by GH¢3.8 billion – (1.7 billion + 1.4 billion + 0.7 billion)–should the financing plan of selling state assets, prepayment of license fees, and monetization of mineral royalties, fail to materialize.
In addition to this, the government has issued a bond worth GH¢2.2 billion to GCB in respect of its assumption of the collapse of UT and Capital Banks. This has added to the public debt and will be borne by the poor tax payer”.
Furthermore, the Government has earmarked GH¢2.3 billion as possible cost to the tax payer should Unibank collapse. This means that the Financial Sector related costs for 2018 will also increase the Public Debt by GH¢4.5 billion – (GH¢2.2 billion + GH¢2.3 billion).
The Minority also contend that, by their projections for the year 2018, government will be adding about GH¢25 billion to the Public Debt stock.
This will add to the total borrowing for 2017 of some GH¢ 26 billion. The Public Debt therefore, can be projected at about GH¢173 billion by end-December 2018, which will take our debt to GDP ratio well beyond the 70% HIPC threshold.
Ato Forson also indicated that government’s decision to cap transfers to statutory funds is gradually collapsing it.
“The capping law was introduced purposely to free some revenue for government to undertake opulent expenditure but this has rather proven woefully inadequate due to the huge fiscal burden emanating from the introduction of new expenditure”he noted.
Cedi continues to slide
Mr. Forson also bemoaned the continuous nosedive of the Ghana cedi, which he says is showing no sign of improvement despite lofty talk from government and the Bank of Ghana.
“It is currently trading at GH¢ 4.8 to the dollar and appears almost set to reach GH¢ 5 to the dollar if the trend is not curbed immediately. This has in turn led to steep rises in the prices of goods and services leading to more hardships for the people. Fuel prices have increases astronomically as have transport fares”.