Osafo Marfo: 2010 Budget Is Good But....

The Budget Statement and Economic Policy for the year 2010, may have been laid before parliament, but the debate bandwagon still rolls on, led largely in part by both politicians and economic think tanks alike, and there is no stopping it, yet. The latest to join in the fray is the former Minister of Finance in the erstwhile NPP regime, Mr. Yaw Osafo Marfo.

Mr. Osafo Marfo strongly contends that to totally rubbish off the 2010 Fiscal policy framework of government and say there is no substance in the budget will be disingenuous, insisting that whiles “some aspects of it are good, other segments of the budget left much to be desired.”

Speaking in an interview on PEACEFM’s “Kokrokoo”, the former Finance Minister held that technically, some of the analyses contained in the budget are false. He also added that in the presentation of the 2010 budget statement, a comparison with last year’s (2009) budget should have been done to ascertain whether certain economic objectives were met.

“If you look at the inflation target, they were talking about 14.59% but they ended up at 18%, so it did not go down well. The growth target was 5.9% but it declined sharply to 4.7% and that is dangerous, because the growth at the end of 2008 was 7.3% so if you contract (lessen) it to 4.7% in 12 months, then it means you are increasing unemployment, you are not expanding goods and services of the nation,” he stated.

The former Member of Parliament for Oda in the Eastern Region opined that considering “the rate of unemployment in a country, with about 25 universities churning out products by the day, it is unwise to contract the economy”.

He also faulted government for “treating arrears as a deficit, saying it does not make economic sense.”

“…some arrears have not been paid, so if your arrears have not been paid, how do you add it to the expenditure line as if you have spent it, you don’t add arrears to your deficit as if you have spent the money….When you borrow…,if you have payment over 5 years, only one fifth of it will hit the expenditure. You cannot use all the 100% to hit expenditure when you can borrow to pay for only 20% to hit expenditure. That whole analysis is false,” he added.

According to him, “it’s also a matter of fact that proceeds from divestiture must be recognized as revenue, but to say that deficit excluding divestiture...it is wrong. You cannot exclude divestiture proceeds from revenue,” he stressed.

Mr. Osafo Marfo however, commended the government for increasing the national reserve from a 1.8month cover to a 2.4 month cover saying, “you must congratulate the government, they have stabilized the cedi within the last 3 months…but it’s a mixed budget with positives and negatives, but we have a lot of work to do, particularly on revenue,” he said.

“We need to raise revenue in a massive way…how do you announce that your domestic revenue has fallen, in a country that has a deficit, how?” he rhetorically asked.

Another area he gave the government the plus was the decision to restore levies and duties which were removed on the importation of rice and other poultry products in May 2008, ostensibly to cushion Ghanaians on the impact of global food crisis. He admitted that the NPP lacked the political will to re-impose the levies and duties.

“I’m happy about it, it was a decision we could not make…it is a question of political courage...But it lacked detailed measures on how the production of local rice will reduce the deficit..., so government should as a matter of urgency come out with a programme to boost local rice production so that in the medium term we will be self-sufficient in rice production,” he stated.

Asked to substantiate reports that the International Monetary Fund (IMF) has a huge sway in the policy direction of the country's budget, Mr. Marfo was categorical in his response that “there is no budget presented which is not influenced by the IMF, he however, declined to go into the specifics.

Source: Alex Offei/peacefmonline.com/Ghana