Ranking Member on the Finance Committee has described the measures announced by the Finance Minister, Ken Ofori-Atta, to alleviate the prevailing economic hardship, as “beating about the bush.”
According to him, the measures will erode all the confidence Central Bank brought into the economy after it increased the policy rate – the rate at which it lends to commercial banks – by 2.5% per cent to 17%.
Speaking on JoyFM’s Top Story, on Thursday, in reaction to comments made by the Deputy Minister of Finance, Abena Osei-Asare, Dr. Casiel Ato Forson stressed that the measures are “simply empty.. so they are only beating about the bush.”
“What this government did today, without quantifying properly, the impact of the measures they have announced, I do not see any significant change with what they are going to do. For example, they talked about the Energy sector IPP and said that it is going to accrue some GHC1.5billion, it is already not in the budget and went ahead to say that they are going to cut fuel coupons and it is going to bring about GHC52 million, is that all?
“And the Deputy Minister could not tell us how much the 30 percent cut is going to accrue to the state. Is that the reason they hide such a speech and created the impression that they are going to solve the problems of the economy?” he quizzed.
He further stated that with the approach government took , “we are back to Bartan.”
According to the former Dr. Forson, he expected the Finance Minister to announce a moratorium on new loans.
This, he explained, is due to the fact that Ghana as a country is in a situation where debt is increasing at an alarming rate, and as a result, investors in New York believe we will be unable to repay our debts.
Touching on the $2billion to be pumped into the economy, the legislator noted that, “it is a lie” and entreated the government to come clean.
”The $2billion is already a debt to GDP… In fact, going to add an additional $2billion in debt will increase our debt to about GHC15 to GHC16billion,” he told Evans Mensah.
“What is in the budget and all that they are trying to do, is not up to a billion Ghana cedis,” he stressed.
Finance Minister, Ken Ofori-Atta, has revealed a wide range of plans to salvage the country’s economy.
The Minister, at a press conference in Accra, on Thursday, expressed optimism that the measures will go a long way to cushion the citizenry amid the economic downturn.
These measures encapsulate expenditure cuts, intense revenue mobilisation drive, fuel price mitigation and currency financing.
- Discretionary spending is to be further cut by an additional 10%.
- 50% cut in fuel coupon allocations for all political appointees and Heads of government institutions, including SOEs, effective 1st April 2022.
- Imposition of a complete moratorium on the purchase of imported vehicles for the rest of the year with immediate effect. This will affect all new orders, especially 4-wheel drives. This is geared towards reducing total vehicle purchases by the public sector by at least 50 percent for the period.
- Government has imposed a moratorium on all foreign travels, except pre-approved critical/statutory travels.
- Government will conclude on-going measures to eliminate “ghost” workers from the Government payroll by end December 2022;
- Government will conclude the renegotiation of the Energy Sector IPPs capacity charges by end of Q3-2022 to further reduce excess capacity payments by 20% to generate a total savings of GHS1.5 billion;
- Impose a moratorium on establishment of new public sector institutions by end April, 2022.
- Prioritise ongoing public projects over new projects to enhance the efficient use of limited public funds over the period by finishing ongoing or stalled but approved projects.
- Heads of SOEs to contribute 30% of their salaries from April to December 2022 to the Consolidated Fund.
- Pursue a comprehensive re-profiling strategies to reduce the interest expense burden on the fiscal; and liaise with Organised Labour and Employers Association to implement with immediate effect, the measures captured in the Kwahu Declaration of the 2022 National Labour including reforms towards addressing salary inequities / inequalities (e.g. Article 71 Office Holders), the weak link between pay to productivity and the sustainability of the payroll.
Fuel Price Mitigation measures
Government has committed to reducing margins in the petroleum price build-up by a total of 15 pesewas per litre with effect from 1st April. The reductions are expected to reduce prices of petrol by 1.6% and diesel by 1.4%.
The details are as follows;
- BOST margin reduced by 2 pesewas per litre
- Unified Petroleum Pricing Fund (UPPF) margin reduced by 9 pesewas per litre
- Fuel Marking Margin (FMM) reduced by 1 pesewa per litre
- Primary Distribution Margin (PDM) reduced by 3 pesewas per litre
- National Petroleum Authority (NPA) in discussion with the OMCs to reduce their margins.
- Government to ensure consistent supply of fuel and manage the rate of ex-pump price increase by ensuring that BoG has access to adequate foreign exchange.
Revenue mobilisation measures
- Begin the implementation and collection of the revised Property Rate by end of April 2022.
- Implement the E-VAT/E-Commerce/E-Gaming initiatives by end of April 2022.
- Roll out the simplified tax filing mobile application for all eligible taxpayers by July 2022;
- Impress upon Parliament to fast track the passage of the E-Levy Bill, Tax Exemptions Bill, and Fees and Charges Bill.
- Prioritise the Revenue Assurance, Compliance, and Enforcement (RACE) Programme to plug revenue leakages especially at the ports and the infamous fuel bunkering and small scale mining exporters cabal.
- Government to partner the private sector to introduce digital systems to monitor quarrying, sand winning and salt winning to get more revenues from our natural resources; and
- Immediately enforce the “No Duty – No Exit” policy at the MPS Terminal at the Tema Port to improve revenue collection
Financing and Currency Measures
- Government to conclude external financing arrangement of up to US$2 billion in the next 2-6 weeks in line with approved external financing for 2022 and for liability management.
- MoF to work with the Central Bank to review the foreign exchange retention policy to ensure multinational companies in the extractive sectors retain foreign exchange earnings, from the sale of our resources, in the country.
Additional Measures over the medium term.
- Wean-off public tertiary institutions from government payroll and provide them with a fixed amount “block grant” instead.
- Pursue reforms to address structural challenges in public financial management including procurement and commitment control, payroll management and human resource management.
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