General News Fri, 28 Feb 2003

Budget Offers No Hope For Ordinary Folks - Minority

Moments after Finance Minister, Yaw Osafo-Maafo (MP) presented this year’s budget statement to Parliament, the main opposition -the National Democratic Congress in Parliament described it as a ''killer budget.''

Its spokesman on Finance, Moses Asaga (MP) told a press conference in Parliament that the budget offers no hope for the ordinary people of this country and contains no new ideas as to how to deal with the problems of the country, which include unemployment, and low remuneration of workers.

Below is the full text of the statement:

The budget and economic policy statement can best be described as a KILLER BUDGET, a budget of no hope to the ordinary people of Ghana with no new ideas. The contents of the budget shows that the government has lost control of the economy and all the modest rnacro-economic gains that were attained in 2002 have been eroded.

Inflation is on the increase, the cedi is nose (living and depreciating rapidly against the major currencies, government is over-spending and both the domestic and external debt is Increasing at an alarming rate. The adoption of HIPC has worsened tile economy and Ghanaians are yet to feel it in their pockets. The poor management of both the fiscal and monetary policies is going to hurt the economy in 2003 and workers will suffer more than ever.

The increase of fuel prices by 95% is affecting prices of goods and services; transportation, school fees, hospital fees and food are all increasing on a daily basis. The price of milk increased from ?3,200 to ?4,000, a ball of kenkey of ?500 is now selling at 1,000, bread at ?6,000 and transport fares have gone up by 70%.

Despite all these increases the salaries of 'workers is being frozen and minimum wage is only ?9, 000. Real inflation is predicted at double digits as against single digit target for the 1st quarter of 2003 promised by the government.

The increase in fuel prices has also hit industry as cost of production is very high making Ghana a high cost center of production compared to its neighbours in West Africa, killing the Golden Age of Business.

The government has allowed the IMF/World Bank to prescribe very hard conditions on the good people of Ghana because of significant non-performance, government's overspending, lack of transparency in dealing With the famous IFC Loan, and the petroleum formula and missing most of the macro-economic target that they promised the Bretton Woods institution in 2001 /2002.

In 2002, government over borrowed to the tune of 1.3 trillion instead of 450 billion promised, incurred more debt on TOR to the tune of 4850 billion and on VRA 4650 billion, bringing the total indebtedness to $1.5 trillion. All as a result of mismanagement, corruption and creaming of "windfall" profits into "unbudgeted expenditure".

The fraudulent IFC Loan of $1 billion, which was pursued without regards to senior lenders like the IMF/World Bank created a lot of mistrust between the government and development partners. The NPP government’s credibility in the International Financial circles has been down graded seriously.

The IFC was definitely a bad deal, it did not exist, but government including MOF, Governor and Senior Minister were deceived into chasing a mirage in Washington, Bonn, London, and even "MOSCOW" Causing financial loss to the state.

The year 2003 is going to be a difficult year for Ghana.

Annual year-on-year inflation will increase to 250% and average inflation to approximately 55%. The cedi will continue to depreciate against major currencies. In 2002 the cedi depreciated by 15% and 30% to the dollar and Pound Sterling respectively. Speculation on the dollar will increase.

GDP growth will be stagnant at 4% instead of 8% promised in the year 2001. The budget as it stands now is not backed by a comprehensive Poverty Reduction Strategy document which is a conditionallity and requirement to trigger official inflows. The GPRS has a lot of shortfalls and this would affect donor inflows again for the year 2003.

The Poverty Reduction Support Credit is in jeopardy and releases under a would be delayed because the Ministry of Economic Planning and Regional Integration has not been able to compile a credible GPRS document for the donor community.

We the NDC are calling on the government to assemble a "Think Tank" 'to deal with the problems of the economy because the Economic Management Team headed by the Senior Minister has lost control.

In order to minimize the economic hardships we call on the government to take advantage of the on-going programme negotiation with the IMF to negotiate an IMF Programme with a human face devoid of increasing tariffs for electricity and water, increasing petroleum prices, and economic pricing for utilities. Also, the government must review the fuel prices and make a downward adjustment of the ex-pump price and also reject the "freezing of wages clause" in the IMF Aide Memoir.