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
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.
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.
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
