A retired Ghanaian Professor of Economics, Prof. George Ayittey, has asked the Mahama-led government to slash the ever-growing public sector wage bill by 40% to save the country’s economy from collapse.
This slash, he said, should also affect ministers, deputy ministers and other government appointees to help salvage the ailing Ghanaian economy.
Between January and August this year, the government spent a staggering GH¢5,022.9 billion on wages and salaries. The figure is expected to hit GH¢11 billion by the close of 2013, according to the government.
Prof. Ayittey, who is among millions of Ghanaians who are very angry at the state of the West African second largest economy, added: “Ghana’s public sector is riddled with overspending, wasteful practices, willful extravagance with public funds and financial irregularities.
“Too many ministries and government agencies means overlapping jurisdiction and functions, and soaring government expenditures.”
Speaking at a news conference organised by the Institute of Economic Affairs (IEA), a leading public policy think-tank, in Accra yesterday, he noted that the multitude of parallel institutions and bloated bureaucracy had created a huge government workforce of over 600,000 workers, and a wage bill, which consumes 74% of the country’s budget.
Prof Ayittey, who is also a Visiting Senior Fellow of the IEA, noted: “We have 97 cabinet ministers and deputies; we also have ministers of state at the Presidency, presidential staffers, advisors, Council of State, etc.
“How many advisors does the President need? Then, we have at each ministry, Chief Directors, deputy Chief Directors, assistant deputy Chief Directors, etc.
“Each one of them must have a government bungalow; a Pajero (SUV), a saloon car, a garden boy, a cook, a day watchman, a night watchman, security guard and utility bills paid by the government.”
According to the renowned Economist, there are some high government officials, who, for the past years, have not paid a single pesewa in rent or utility bills.
“Most infuriating is that at the end of their service, they want the government bungalows sold to them at fire sale prices with loans from the same government!”
Touching on deficit, Prof Ayittey fumed: “The actual deficit in the budget is GH¢8.6 billion, which includes wage arrears and discrepancies.
“This is the situation we have faced for the past 15 years. The Mahama administration did not create this structural deficit problem, he inherited it and has implications.”
According to him, the government has no savings out of which to finance its capital expenditures; and to close the budget gap. This, he continued, meant that the government would have to either borrow or raise revenue through increment in taxes.
On borrowing, Prof Ayittey reminded the government to borrow from three sources to finance its ever-surging deficit, noting: “Borrowing from foreign sources by issuing bonds.
“But, if the government floods foreign markets with Ghana Government Bonds, they eventually lose their value, which is why Fitch downgraded Ghana Bonds to a B rating recently.
In the case of the Bank of Ghana, he said, issuing Treasury Bills and Bonds is inflationary as it increases the supply of money.
“This source of borrowing scoops up available domestic savings crowds out the private sector and makes it hard for private businesses to find capital for business expansion to employ workers.”
Raising revenue
The renowned Ghanaian Economics Professor noted that the government was always hungry for revenue, but because the income tax was small, any revenue enhancement strategy fell heavily on excise duties and commodity taxes, which is why the government slaps taxes on anything that moves.
On the cutting down of government expenditures, he stated: “We have a bloated bureaucracy in this country, and the size of the government has grown so rapidly that it is suffocating the economy.
“In 1997, there were 88 cabinet and regional ministers, plus their deputy ministers in Ghana with a population of 25 million. In 2004, the number had reached 92, but now it has shot up to 97. {The US, with a population of 300 million, has 40 secretaries and assistant secretaries}.”
In addition to this, the learned economist noted: “The explosion in government bureaucracy is due to the tendency to create parallel institutions when existing ones do not work. The legal or normal court system is one prime example.”
Action plan
Prof Ayittey, who is also President of the Free Africa Society, therefore, suggested to the government to “cut the 97 cabinet ministers and deputy ministers by half; abolish these ministers of state at the presidency; reform the Council of State and other parallel institutions such as Fast Track Court, CHRAJ, etc; abolish the perks and privileges, and retrieve state properties sold to past and present government officials.”
He, however, argued that Parliament, but not government, should be demanding these reforms. “If government expenditures have gone out of control, it is because parliament is not doing its job,” he noted.
