Rawlings blamed for fall in Foreign Direct Investment

Accra, Feb. 10, GNA- The decline in Foreign Direct Investment (FDI) was the subject of controversy when the debate on the 2004 budget begun on Tuesday.

Available statistics, quoted by Mr. Steve Akorli, NDC-Ho East, during the debate, indicated that in 2000, when the NPP came to power, FDI was 134 million US dollars and fell to 95 million US dollars in 2001 then to 65 million US dollars in 2002.


Mr. Akorli suggested that it was the poor performance of the NPP, which was responsible for the persistent decline since 2000.


Mr. Charles O. Nyanor, NPP-Upper Denkyira, refuted Mr. Akorli's claim saying "how can FDI increase when there were shouts of 'boom boom' all over the place". Mr. Nyanor said, "negative utterances by important persons in the country scare away investors."


He said, "investors are very sensitive characters and would respond to the slightest scare", adding that it was difficult to convince investors when important public figures had planted negative ideas in their minds.


Mr. Nyanor noted that other reasons for the decline in the FDI was the negative information anti-government characters put on the internet to suggest that Ghana was not a safe investment destination, adding that the 'erroneous" claim by the Transparency International about Ghana's corruption status, was also a contributory factor.


Mr. Joseph Henry Mensah, Senior Minister noted that the economy mainly depended on domestic investment and not FDI, adding that there was no point in making a fuss over the decline or otherwise of FDI. Mr. Seidu Paakuna Adamu, NDC-Bibiani/Anawiaso/Bekwai, said the budget was "a recipe for the massacre of the economy," adding that the economy had been shattered for the past three years and this budget had come to further worsen it.


"This economy has for the past three years been a sleeping elephant, very reluctant to respond to challenges of unemployment and the subject of black market among others," he said.


He said the NPP government has consolidated the black market and there was now a malfunctioning of the economy.

Mr. Adamu said because of the current 18 per cent interest rate, coupled with over 22 per cent inflation, it was unprofitable to save in the banks, adding that people were retrieving their money from the banks and were increasingly patronizing the black market to get value for their money.


Mr. Moses Asaga, Ranking member on Finance said the budget did not address the issue of unemployment and the youth were on the streets selling dog chains.


He said the budget failed to address the issues of housing, high utility bills, hospital bills and was silent on how to push the low incomer earners up to be able to meet the high cost of living. On the stability of the cedi against the major currencies, he said, "it was ambiguous to boast of the cedi's stability against the US dollar, which in itself was depreciating world-wide.


"We do more business with United Kingdom and the European Union countries than we do with the US and yet the cedi is depreciating against the pound sterling and the euro on weekly basis and we keep boasting about stability of the cedi against the dollar," he said.


Mr. Kwamena Bartels, Minister of Private Sector Development said the response of the President to the needs of the private sector as reflected in the budget, was indicative of the fact that the NPP government was a "listening government."


He noted that various budget statements in the past had been given harsh descriptions such as "Killer Budget" among others, but the minority went only as far as describing 2004 budget as a "campaign and electioneering budget."


This, he said, attested to the fact that the budget was friendly and was intended for growth all sectors of the economy.


"The private sector is happy with the massive tax reliefs in the budget because it provides them with more money, which would serve as extra resources to expand, high more hands and in effect create more employment," he said.

Captain Nkrabea Effah-Dartey (Rtd), Deputy Minister of Local Government and Rural Development said it was refreshing to note that out of the projected 25 trillion cedis revenue for 2004, about 75 per cent was expected to come from local sources, adding that it was indicative of the government's proactive measures to increase revenue mobilization in the country.


Let production incentives be transform into lower prices of goods-forum Ho, Feb. 10, GNA- Participants at a forum on the 2004 budget in Ho on Tuesday recommended to government to introduce mechanisms to ensure that production incentives to industry and the commercial sectors provided in the budget benefit the entire populace in the form of lower prices of goods and services.


They therefore, urged government to extend the public forums on the budget to industry and business sectors for them to appreciate the import of the incentives and the need for them not to hi-jack the benefits from the rest of the population in their quest to reap 100 per cent profits from their operations.


The participants said the notion that budgets automatically meant higher prices of goods and services need to be eradicated from the Ghanaian mentality to pave the way for a proper understanding of budgets by the average Ghanaian.


Some other concerns raised by participants included when Ghana was going to get out of HIPC, the easy availability of agriculture inputs with the removal of import duties on them, the fate of the textile industries with the influx of foreign textiles and their lower prices and the governments ability to meet its revenue targets by reducing tax levels.


Others included the reliability of statistics on the performance of the economy and other economic indicators and the management of domestic debts.


Some participants were apprehensive of the likely erosion of the benefits envisaged in the budget by unforeseen increases in the world price of crude oil and the effects on the value of the cedi in relation to foreign currencies as people resort to buying of such currencies as a result of the reduction in the treasury bill rate.


Responding to the issues raised, Nana Ohene Ntow, Government spokesman on Finance said the realisation of the objectives of the budget depended on the goodwill of the citizenry, hence the holding of forums to get them to own it and help in its implementation.

He said forums would be organised for those in the industrial and commercial sectors for them to appreciate the import of the incentives accorded them.


On HIPC he said the country has so far reap a lot of benefits and as far as the benefits kept on coming there should be no hurry to come out of it until the country's debt to revenue ratio improves considerably. Nana Ntow assured that government revenue would not be adversely affected by reduced taxes but would rather increase.


He explained that with increased production and profits, industry would pay more tax and coupled with efficient tax administration government revenue would be more than treble.


The Spokesman cited the improved performance of the revenue agencies so far as benefits that could be accrue from improving on the efficiency of tax administration.


Regarding the influx of foreign textiles and the negative effects on prices on the local industry, Nana Ntow said the influx was not due to the purported revenue to government from such textiles but because of smuggling, explaining that government loses revenue from such activities.


The Spokesman urged entrepreneurs in the textile sector to explore opportunities in external markets and tune their production to satisfy them in order to overcome the menace of lower foreign textile prices. He said it would be difficult for the government to deal with smuggling the way people expected because the practice is the source of livelihood of communities along the border and that the issue needed to be approached with circumspection.


Nana Ntow said the government has taken the necessary measures to cushion any sudden increases in world petroleum prices but when the increases were more than expected then the public would have to bear the impact.


Earlier in his opening remarks, Nana Ntow discounted the notion that the budget was tailored to appease the electorate because of this year's elections.

He said the government on assumption of office set out to correct the macro-economic instability of the country within three years and launch the economy onto the path of growth as reflected in the budget. Nana Ntow said budget and finance are based on facts, which could be verified and so the government would expect its detractors to provide proof of what the budget should otherwise have been.


He said the government has succeeded in lowering inflation, interest rates and government's borrowing from the banks and ensured a high degree of predictability of the economy and has attained a high credit rating which the country did not have when the government was voted into office.


He said the time was therefore, ripe to provide incentives to the private sector, promote agro processing and make workers to reap the maximum benefits of their sacrifices as indicated in the budget. Nana Ntow said the 2004 budget should therefore, be seen as national in character and not fashioned out of political expediency.


Mr Kwasi Owusu-Yeboa, Volta regional Minister who presided said debate on the budget should focus on issues rather than on "catch phrases". He said the budget was the determination of the government to pursue prudent economic management rather than an exercise in political expediency.