The Minority in parliament are projecting new taxes to deal with the financial sector mess that have been created by government in the 2019 budget.
According to the ranking member of parliament’s finance committee, Cassiel Ato Forson, there is an economic decline despite promises from government; “in spite of President Akufo-Addo being on record to have stated that the 2019 budget portends hope for the people of Ghana, their analysis shows that Ghanaians are in for very tough times in 2019” he said this at a minority round table discussion on the 2019 budget in Accra on Tuesday.
He stated that Ghanaians should expect the following: new taxes to deal with the financial sector mess they have created and their populist policies, a budget that is skewed away from the economic (growth-oriented) sectors to non-economic sectors(goods and services), prevailing hardship will persist and may even get worse, worsening unemployment situation, more debt accumulation due to alarming borrowing for consumption, upsurge in government expenditure on populist policies.
Other expectations the minority projects includes : the issuance of a century bond which is over and above the absorptive capacity of the economy, cut in capital expenditure allocation to MMDA’s that are mandated to execute capital investments on behalf of government and collapse of earmarked funds(NHIL, GETFUND, Roadfund, DACF) using Earmarked fund capping and realignment law.
The prospects for a full recovery and robust growth predicted by institutions such as the World Bank in 2016 has stagnated and fizzled out for the non-oil sector, the Minority in parliament has said.
According to the ranking member of Finance Committee, Cassiel Ato Forson, the slow growth in the economy is due to the inability of the NPP government to continue with the growth-oriented policies initiated by former president, John Dramani Mahama.
“The NPP government inherited an economy with a relatively stable electricity supply: robust oil and gas production due to the massive public and private investments under the able leadership of , John Dramani Mahama, a robust economic and social infrastructure to boost economic activity; measures and policies such as ESLA to tackle emerging problems in the financial sector; an active private sector; a recovering economy with a positive outlook that would translate into sustainable jobs; a vibrant Agriculture sector; relatively stable exchange rate; as well as lower prices of energy and petroleum prices”
Citing the current high rates of unemployment which he says is gradually developing into a crisis, hardships caused by harsh fiscal policies, worsening growth in the financial sector due to unprecedented accumulation of arrears.
“What was billed as an economic turnaround has brought severe hardships. The lay-offs are unprecedented across all sectors of the economy and government must act accordingly” he added.
On debt accumulation and the impact of the century bond, the minority pointed out that government intends to commit the country to a US$50bn century bond and also plan on tabling the first tranche of the amount for approval by parliament in the 2019 budget.
The minority also stated that by their projections additional borrowing will take the public debt to GH₵170bn by close of the year. This will represent an increase of nearly GH₵50bn in two short years.
Government’s own bond issuance calendar shows that between 2017 and 2018, a staggering GH₵117bn would have been borrowed from domestic bond issuances alone.Part of this amount has been used to roll over maturing debt with the rest representing fresh debt that was used to finance the budget, the Minority noted.
Furthermore, the stressed that the overall policy of government has been characterised by: poor revenue performance and weak expenditure management, increasing expenditure on goods and services and low capital expenditure, accumulation and hiding(through offsets in the 2017 budget) of arrears owed contractors which has resulted in high non-performing loans, collapse of earmarked and statutory funds with the capping law, misapplication of ESLA proceeds which has resulted in an increase in fuel price.
The minority also cited the collapse of earmarked and statutory funds,policy failures such as 1 constituency 1 million dollar, 1 district 1 factory, 1 village 1 dam.