Even though Finance Minister Yaw Osafo-Maafo has not yet presented President Kufuor's 2004 Budget to the people, Ghana Palaver can authoritatively state that even more hardships are going to be imposed on Ghanaians.
The obedient pupil of the International Monetary Fund (IMF) that he is, President Kufuor has agreed with the Fund on more pernicious economic measures than the country was treated to last year. According to the IMF Country Report No. 03/395 of December 2003 sighted by Ghana Palaver, in order to secure the IMF loan of about $220 million which would be made available over a three-year period, civil servants salary increases in 2004 would be restricted to only 19% over and above last year's very low levels.
Subsidies to public enterprises would continue to be reduced.
Only ?97 billion out of the over ?650 billion arrears due to the District Assemblies Common Fund (DACF) and the GET Fund will be paid in 2004. Consequently, students at our tertiary institutions will continue to sleep eight to a room meant for two people. Students will continue to stand outside lecture rooms and listen to lectures. Ghanaians in the rural areas will continue to drink bilharzias-infested water and sleep in darkness because they cannot afford the high water and electricity tariffs or astronomical kerosene prices. The metropolitan cities of Accra, Kumasi, Sekondi-Takoradi and Tamale will continue to be inundated with filth.
Under the same Agreement, the 2004 Budget will increase the VAT whose introduction the NPP opposed and led four innocent Ghanaians to their deaths in 1995. Starting July 1, 2004 the VAT will be increased by 2.5% from 12.5% to 15%.
This means that every item that currently attracts VAT will have its price increased by 20%. For example the price of a bag of cement currently selling for ?45,000 will now sell for at least ?54,000 per bag.
The Kufuor Government also proposes to increase petroleum products prices by at least 7% in the first quarter of 2004 and another at least 5% by April 30, 2004, bringing the price of petrol, for example, to at least C23,000 per gallon.
Electricity and water rates or tariffs will also be increased by at least 9% in the first quarter of 2004 and a further at least 7% by April 30, 2004.
The Government also intends going ahead with its plan to divert to the National Health Insurance Scheme 2.5% of workers' Social Security contributions. This decision is opposed even by the IMF which stated in the Country Report under reference that "the staff (IMF staff) took issue with the planned diversion to the NHIF of one-seventh of worker's social security contributions", noting that this would further weaken the ability of SSNIT to cover its long-term pension liabilities, an argument that was also being made vociferously by the Trade Unions in Ghana. The authorities (Ghana Government) however maintained that SSNIT will be able to meet all its obligations for the next 20 years or so without needing to raise contribution rates."
In the 2004 Budget, the IMF expects the Kufuor Government to inform Ghanaians that their 2003 GDP target of 4.7% was achieved, their target of zero net domestic financing of the budget was also achieved and their year-end inflation target of 22% was also met.
An economist that Ghana Palaver spoke to asked: "if all these targets were set to make life a little bit more comfortable for the Ghanaian, why is it that despite achieving all these targets the hardships have increased and life for the Ghanaian has become even more unbearable? Or were these targets actually set by the NPP Government to make life unbearable for the Ghanaian?"
For 2003, the NPP Government says there was a bumper cocoa harvest of 500,000 tonnes. We have also been informed that average cocoa prices are about $1,650/tonne. Gold prices have reached an all time high of $420/oz and oil prices hover around only $25-28/bbl. Yet the exchange rate of the pound sterling to the cedi is now ?1.00 to ?16,800.
When the NPP took over from the NDC Government the cedi/pound sterling exchange rate was ?9,000 to ?1.00. In other words, in President Kufuor's three years in office, the cedi/pound sterling rate has depreciated by about 87.0%!
It is expected that the Minister of Finance will announce in the 2004 budget that inflation will be brought down from 22% in 2003 to less than 10% in 2004 at a time when VAT will go up by 2.5%, utility prices would go up by a minimum of 15% and petroleum prices will also go up by some 15%.
It is not expected that there will be any paradigm shift in the economy since foreign aid and grants will continue to account for at least 40 to 45% of the 2004 Budget, capital expenditure will continue to be less than 35% of total expenditure and out of this about 40% will be foreign financed, and GDP for the year will increase by only 0.3 % to 5%.
The same economist that Ghana Palaver spoke to earlier asked: "can we at this low investment rate achieve our middle-income status by the year 2010 as President Kufuor's Government has promised? From what we have learnt of the budget to be announced Ghanaians should expect a very difficult year. Parents would not be able to pay their children's school fees, workers cannot make ends meet, businesses would be folding up every day and employers would find it very difficult to pay their workers' salaries. We cannot allow this state of affairs to continue for another year".
Ghana Palaver has stated several times that President Kufuor's Government acts with impunity. Now the Government's own masters, the IMF, has confirmed that by its determination to go ahead with the 2.5% deductions of workers' contributions towards the National Health Insurance Scheme against the objections of the contributors themselves, the NPP Government clearly does not respect the sensibilities of Ghanaians.
