4.5% deficit target not achievable – NDC MPs

The National Democratic Congress (NDC) Members of Parliament (Minority Caucus) have raised doubts about the country’s projected deficit target of 4.5% GDP.

In the view of the Minority NDC group, all the analysis they’ve done about the economy points to the direction that projected target will not be realized as a result of excessive expenditure by the government.

Ghana’s fiscal deficit has been projected to go down to 4.5% in 2018, according to the International Monetary Fund (IMF), but the Minority NDC Caucus have expressed concern to achieving the target.

“The projected deficit target of 4.5% would be missed due to huge deviations in revenue and expenditure and the financial sector related cost”, the Ranking Member of the Finance Committee and Spokesperson for the Minority on Finance, Hon. Casiel Ato Forson told a gathering a gathering at a special roundtable breakfast dialogue on the 2018 Mid-year Economic Performance and Projections in Accra.

His comments come ahead of a mid-year budget review expected to be presented by the Minister for Finance Minister, Ken Ofori Atta on Thursday, July 19, 2018.

The Minority NDC Caucus are anticipating an increase in the Value Added Tax (VAT) from 17.5% to 21.5% as well as some other taxes.

According to the group, the government is accumulating arrears and sweeping them under the carpet, while there is also a prior decision by government to cut down expenditure up to an amount of GH¢850 million purposefully to make enough savings to meet demands from specific expenditure.

This decision, they argued, is already starving some key sectors of the economy.

He also added large fiscal slippages are being created by the government’s inability to raise the needed additional revenue to meet the unrealistic promises that are increasing expenditures.

They also revealed that the government intends to follow through a plan of raising GH¢3.8billion from selling state assets, notably VRA assets, prepayment of license fees by the telcos, and monetization of mineral royalties.

“The Public Debt is expected to increase further by GH¢3.8 billion state assets, prepayment of license fees, and monetization of mineral royalties, fail to materialize. In addition to this, the government has issued a bond worth GH¢2.2 billion to GCB Bank in respect of its assumption of the collapse of UT and Capital Banks. This has added to the public debt and will be borne by the poor tax payer”, explained Hon. Ato Forson.

He added “Furthermore, the Government has earmarked GH¢2.3 billion as possible cost to the tax payer should Unibank collapse. This means that the Financial Sector related costs for 2018 will also increase the Public Debt by GH¢4.5 billion – (GH¢2.2 billion + GH¢2.3 billion)”.

The Minority also contend that, by their projections for the year 2018, government will be adding about GH¢25 billion to the Public Debt stock to make the projections for the country’s public debt to stand at about GH¢173 billion by end-December 2018.