Ghana's economy robust – Terkper tells NPP

Finance Minister Seth Terkper says Ghana’s economy is not in tatters contrary to arguments by the main opposition New Patriotic Party (NPP).

He said the stabilisation levy introduced by the former Kufuor administration is no different from what the current Mahama administration is doing, adding that: “This is not the first time we are using temporary measures to try and resolve positions”.


Mr. Terkper also noted that the Kufuor administration sought solace in the same tax instrument during the global food crisis and so wondered why the opposition was hitting hard at the government for doing same.


He told XYZ News on July 9, 2013 that the government is only making efforts to “re-align the budget” and added the refinancing a loan is not borrowing to pay interest and demanded to know from the NPP if they did not do a similar thing under former President Kufuor when the country signed up to the Highly Indebted Poor Countries Initiative in 2001.


The minister also denied claims that the government has introduced five new taxes to shore-up revenue due to the precarious nature of the country’s coffers.


At a press conference in Parliament on Tuesday July 9, 2013, former Finance Minister Yaw Osafo Maafo said: “The economy is in tatters, and things are getting worse. Government is no longer in denial. There is now consensus that the economy is in bad shape. This is why it is lamentable that the president is sounding from the rooftop that wherever he has gone to, he is being commended for managing the economy well.”

The press conference, titled: “Ghana’s Troubled Economy” was organised by the Economic Team of the NPP headed by Mr. Osafo Maafo”.


The former Finance minister, under the Kufuor-led NPP administration, explained that Ghana’s economy under the John Mahama-led National Democratic Congress government is facing a myriad of problems including “the huge public debt; the lamentable fiscal deficit, the humongous arrears, unbridled overspending, worsening unemployment, deteriorating utility services, and failing social services.”


These problems, according to Mr Osafo Maafo, are largely as “a result of the reckless expenditures of the 2012 election year” now catching up with all of us, for which the ordinary Ghanaian is now having to bear the brunt of the bad expenditure behaviour of the Mahama government during the 2012 elections.


He explained further that the problems confounding the economy were expressly stated in the Bank of Ghana’s Monetary Policy Committee (MPC) report of 22nd May 2013, where the governor of the Bank of Ghana admitted that “Economic activities have slowed down, and both business and consumer confidence have weakened.”


As far as Ghana’s public debt is concerned, Mr. Osafo Maafo said it is one of the signs of the bad economic management this country has been subjected to under the NDC and “also one of the causes for our economic woes.”

Mr. Osafo Maafo noted that the Mills-Mahama administration inherited a total public debt of US$8billion, equivalent to GH¢9.5billion at the beginning of 2009. Within 4 years and a half, Mr Osafo Maafo stated that this debt has escalated to GH¢38.5billion, meaning that under the NDC, Ghana is adding GH¢6.4billion every year to its public debt.


“A great chunk of this total debt, indeed, 55 percent, is from domestic borrowing”, Mr Osafo Maafo stressed, adding that this development means that government has been competing with, and squeezing out private enterprise from borrowing from the banks.


“This trend explains the reason interest rates on government bills (91-day, 182-day and 1-year fixed note) have risen from about 11 percent in December 2011 to about 23 percent in December 2012. This has caused lending rates to rise. Private enterprises cannot access capital to grow their business in order to employ the youth,” Mr Osafo Maafo maintained.


Recounting how the NDC stigmatised the NPP for “distressing the economy” with “huge arrears” amounting to GH¢1.8 billion, Mr Osafo Maafo revealed that in 2012 government arrears had hit GH¢5.4 billion of which GH¢4.8 billion was incurred in 2012 alone.


These debts, according to Mr Osafo Maafo, are owed to suppliers of goods and services, including small and medium businessmen and women such as road contractors, health service providers, students on scholarship abroad, capitation grant to schools, COCOBOD, NHIS, DACF, GETFund, SSNIT, BoG, OMCs, among others.

On spending, Mr Osafo Maafo revealed that in 2009, the NDC government overspent the approved budget by GH¢300 million; shot to GH¢800 million in 2010; increased to GH¢1.3 billion in 2011; and at the end of 2012 stood at a “stomach churning and mind-blowing GH¢4.8 billion.”


“Within this shell of a figure, the respective overshooting by the respective MDAs is as follows: Ministry of Interior GH¢19 million; Ministry of Health GH¢27 million; Ministry of Education GH¢60 million; Ministry of Environment, Science & Technology GH¢60 million; Ministry of Energy GH¢70 million; GYEEDA GH¢200 million,” Mr Osafo Maafo noted.


He continued, “Ministry of Roads and Highways GH¢270 million; Ministry of Youth and Sports GH¢350; Office of Government Machinery GH¢650 million, including GH¢15 million for guinea fowl business, and GH¢33 million for tree planting, all in the name of SADA.”