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General News Wed, 14 Jul 2010

Stop this inflation propaganda -NPP

STOP THIS INFLATION PROPAGANDA!

The NDC Government has just rushed to the media to praise itself for reducing

June inflation to 9.52 percent. This is misleading and unfortunate.

2. The Ministry of Finance & Economic Planning and the Finance Minister

should rather look at why inflation is falling. If they do that, they will

realise that this reduction in the year-on-year inflation rate is nothing to

rejoice about.

3. Drop in inflation is helpful if it is driven by increase in production.

For instance, if during the maize season, there is abundance of maize so that

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the price of maize comes down, that drop in price is welcome, and the people can

feel it in their pockets because they will spend less to buy an olonka of maize

on the market than they did before. It is inflation drop driven by such

increased production that we all want.

4. Unfortunately, the inflation drop the government is boasting about is

driven by the refusal of government to spend, and thereby reducing the amount of

money in circulation. That is of little use. The Finance Minister’s claim that

government spent more in 2009 than the previous government did in 2008 is a

complete lie.

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5. According to section 2.2 of the February 2010 Bank of Ghana report on

expenditures, “Total expenditure (excluding externally financed capital

expenditure) in 2009 contracted by 2.0 percent compared with a growth of 41.9

percent in 2008.”

6. This report is consistent with government’s own figures. According to

paragraph 71 of the 2009 Budget Statement presented by the NDC Government, total

expenditure in 2008 amounted to GH¢9,538.2 million. And on page 31 of the 2010

Budget Statement, a projected expenditure outturn of GH¢8,659.3 million in 2009

is reported.

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7. This is easy to explain. Domestic capital expenditure for example reduced

from GH¢1 billion in 2008 to a mere GH¢260 million in 2009 (reduction of 74%).

This simply means that domestic investment in infrastructure such as sports

stadia, roads, housing, schools and others has been reduced by a whopping 74%.

8. Therefore, the claim by the Finance Minister that government spent more

in 2009 than the previous government did in 2008 is a deliberate lie. He must

retract it and apologise to the public.

9. If government wants Ghanaians to feel inflation drop in their pockets,

then government has to reduce inflation by increasing the production of goods

and services. Merely reducing money in circulation by refusing to invest in

infrastructure, refusing to pay contractors and postponing other payment

obligations is no economic management. Boasting about this and interpreting it

to mean that “the government's Better Ghana Agenda is well on course” is even

embarrassing.

10. This government has to sit up! They should deliver improvement to people’s

lives and stop the pointless propaganda.

Kwaku Kwarteng

Communications Director

Source: Kwaku Kwarteng