<<Print>>The 2016 budget is the eighth budget of the NDC government since its assumption of office in 2009. Ghanaians were promised a ‘Better Ghana” in 2008 but going into the 8th year of government in 2016, this government has delivered one of the worst economic performances of any government in Ghana’s history.
The record after the last seven budgets of the NDC is definitely not one of a “Better Ghana” than the one this government inherited in 2009. Rather, it is a record of a monumental waste of an historic opportunity to transform the economy of Ghana and improve the lives of Ghanaians. In fact, no government in the history of Ghana has had the amount of resources in terms of tax revenue, cocoa exports, gold exports, oil revenues and loans as this NDC government. The financial resources that have been available to this government are actually mind boggling.
Tax Revenues
In the eight years between 2001 and 2008, the total tax revenue collected was GHC 15.2 billion. In contrast, the government has collected a total of some GHC 90 billion in the last seven years (2009-2015) in taxes.
Gold
Ghana’s gold exports between 2001 and 2008 amounted to $9.0 billion dollars. Between 2009 and 2015, total gold exports have amounted to some $28 billion dollars. Government has therefore earned significantly more from the revenues associated with these exports in the last six years.
Cocoa
Ghana’s cocoa exports between 2001 and 2008 amounted to $7.4 billion dollars. Between 2009 and 2015, total cocoa exports have amounted to some $17.0 billion dollars. Government has similarly earned significantly more from the revenues associated with these exports in the last seven years.
Oil
Ghana has also become an oil exporter during the period of the NDC government. By the end of 2015, Ghana would have exported some $15.7 billion of oil in the last five years and earned some $4 billion from oil during this period. There were no oil revenues accruing from oil exports during the 2001-2008 period or for that matter in any period of Ghana’s history.
Loans
From independence in 1957 to 2008 Ghana’s total debt amounted to GHC 9.5 billion. In the last seven years alone under this NDC government, Ghana’s total debt has increased from GHC9.5 billion in 2008 to an estimated GHC99.0 billion at the end of 2015. The government has borrowed some GHC 90 billion in seven years! This is an unprecedented rate of accumulation of the public debt. In dollar terms, this NDC government has borrowed the equivalent (at the time of borrowing) of some $37 billion in seven years!!! This is a massive flow of resources into any economy by any stretch of the imagination
The record therefore shows that this NDC government has had access to a massive flow of resources in the last seven years. Taxes, loans and oil revenues alone over the last seven years amount to an inflow of some GHC 200 billion in the last seven years. Under the 8 years of the NPP government from 2001-2008, taxes, loans and oil revenues alone amounted to some GHC 20.00 billion. In the last seven years (i.e. excluding 2016) this NDC government has had, in nominal terms, at least 10 times the resources that the NPP had in 8 years.
Notwithstanding all these massive resources in terms of tax revenue, loans, and revenues from gold, cocoa and oil exports amongst others, public finances are in such a bad state to the extent that we had to seek an IMF bailout. That is the record of the last seven budgets of this NDC government. It is a record of failure.
Today, despite all these resources at its disposal,
· Government is in arrears with NHIS payments
· Government is in arrears with GETFUND payments
· Government is in arrears with DACF payments
· Government is in arrears with payments to contractors
· Government cannot pay teacher trainee allowances
· Government cannot pay nursing trainee allowances
· Government is in arrears for the payment of national service staff
· Government is having trouble paying salaries of workers. Some workers have gone for 18 months without salary
· The government has put Ghana in a state of high indebtedness as was the case under HIPC. Today the interest payments n Ghana’s debt is six times Ghana’s oil revenue this year. Ghana’s debt to GDP ratio at the end of 2015 would stand at 74% (beyond the threshold for debt sustainability.
· Economic growth has slowed down to 3.5% this year
· Ghana’s currency is the worst performing currency in Africa over the last two years.
· Unemployment is high and increasing – Government has committed under the IMF program to lay off workers after the 2016 election. But they will not admit it today if you ask them.
· Dumsor is the order of the day
· Businesses are collapsing
· Government has already committed under the IMF program to increasing utility tariffs. The PURC purported consultations with the public on the utility price increase is just a charade. They are as usual throwing dust into the eyes of Ghanaians.
The cost of living has gone through the roof and the 2016 budget offers no relief to the suffering Ghanaian people. It is insensitive to the plight of Ghanaians. It is a story of more taxes, more cuts in expenditure, more borrowing, higher utility tariffs, higher cost of living, less growth and more unemployment. In this regard we can refer to the 2016 budget as a “Dead Goat Budget”.
With the relatively small amount of resources available to the NPP in 8 years of government, the achievements were phenomenal. The economy was transformed from a low income HIPC economy to a middle income economy during that period.
With ten times more resources, what has the NDC done with all the resources under its control over the last seven budgets? Where did all the money go? The NDC has attempted to hoodwink Ghanaians by arguing that the money has been spent on infrastructure projects. The evidence however has exposed this propaganda. The evidence shows that notwithstanding the massive increase in the debt stock, capital expenditure as a percentage (%) of GDP has actually been on the decline from 9.1% of GDP in 2008 to 4.8% by 2014 . Capital expenditure as a percentage of GDP averaged 11% for 2001-2008 (without oil) while that for 2009-2014 has averaged 6% (with oil).
This means that contrary to all the government claims of an increase in infrastructure expenditure on projects all over the country, the reality is that Ghana’s expenditure on infrastructure is declining. The numbers indicate that relative to GDP, this government is investing about half what the previous government invested in infrastructure. It is in fact a travesty that Ghana before the discovery of oil was spending a higher proportion of its income on infrastructure investment than after the discovery of oil and the massive increase in the debt stock. This decline in investment in infrastructure runs counter to what one would have expected.
Indeed, according to the Managing Director of the IMF most of Ghana’s borrowing has been used for consumption and not for investment. One can only imagine what would have happened if each region were allocated $3 billion of the borrowed funds for infrastructure development. Just $1 billion dollars can construct 1000 kilometres of tarred road. We could have build a railway line from Accra to Paga easily. We could have solved the Dumsor problem in addition. It has been a major missed opportunity. This government should be doing so much more in the area of infrastructure given the resources it has had at its disposal.
While the NPP period of economic governance saw an increase in economic growth from 3.7% in 2000 to 8.4% by 2008 NDC on the other hand with the implementation of the last seven budgets has presided over a major decline in economic growth and an increase in unemployment.
In the 8 years of the NPP between 2001-2008 the average fiscal deficit as a % of GDP was 4.4%. In the last seven years (2009-2015) the fiscal deficit has averaged 8.1%, with three successive years of double digit deficits between 2012-2014 (the first time in Ghana’s history). Today under the IMF bailout program Ghana is trying to get to the 2008 fiscal deficit level of 6.5% which the NDC said was bad. Did we go or did we come?
The interest burden of Ghana’s debt is high and increasing. In 2015, the Interest cost of GHC9.57 billion was six times Ghana’s oil revenue. In 2016 the budget estimates that the interest cost of some GHC10.5 billion would also be 6 times Ghana’s oil revenue. The oil discovery has basically been compromised over the last seven years by the government’s recklessness and incompetence.
The government’s willingness to borrow $1 billion on the international capital markets at an interest rate of 10.75% is a demonstration of recklessness, desperation and incompetence. We should recall that this is the same government that criticized the NPP government for borrowing at 8.5% on its debut bond in 2007 when interest rates were much higher internationally. While the 2007eurobond was obtained at a spread of 3.8% above US treasuries, the 2015 eurobond was obtained at a spread of some 8.4% above US Treasuries. What the government has done in this regard can be compared to taking a microfinance loan to refinance a bank loan. Yet instead of bowing their heads in shame, this government rather unbelievably attempted to pass it on as some sort of achievement.
The mismanagement of the exchange rate under this government is also a bitter legacy of this NDC government.
Today, notwithstanding the denial of government, it is now clear that the “dumsor” problem that has been inflicted on Ghanaians over the last four years is more of a financial problem than a technical problem.
What we are witnessing the management of this economy is a toxic mixture of incompetence and corruption (SADA, WOYOME, National Service, GYEEDA, DVLA etc) that has resulted in economic decline and an explosion of suffering across the country.
The 2016 budget is no different from the other seven budgets of this government. Full of rosy promises but ends up breaking those promises and impose hardship on Ghanaians. In this regard, the 2016 budget is no different from the 2012 election year budget. This government will certainly not abide by the targets set by the IMF in this budget. Those targets will be breached for sure as the government will inevitably succumb to election pressures. It is not a credible budget. We should rather focus on the NDC record to get a sense of what would happen in 2016. Unfortunately it is a seven year record of failure.
IT IS TIME TO BUILD A NEW ECONOMY: IT IS TIME FOR CHANGE
Under a Nana Akufo Addo led NPP Government, we are going to build a new economy. What is this New Economy?
· It is not a dumsor economy
· It is not an unemployment economy
· It is not a Woyome Economy
· It is not a GYEEDA economy
· It is not a SADA economy
· It is not a Judgment Debt Economy
· It is not a Friends and Family Economy
· It is not a Wahala Economy
· It is not a “Dead Goat” Economy
· It is not an economy where you have to go on strike before you get your salaries and allowances
· It is not a Propaganda Economy
· It is not a HIPC economy
· It is not an economy where cocoa spraying depends on party affiliation
· Not an economy where people and businesses cannot get bank loans
· It is not a high tax economy
· It is not an NDC, CPP, PNC, PPP, NDP or NPP Economy
THE NEW ECONOMY WE ARE GOING TO BUILD IS AN ECONOMY FOR ALL GHANAIANS IRRESPECTIVE OF TRIBE, RELIGION, AGE OR GENDER. WE ARE GOING TO BUILD A GLOBALLY COMPETITIVE GHANAIAN ECONOMY