The Minority in Parliament has said that measures announced by Finance Minister, Ken Ofori-Atta, to address the current economic hardships in the country were inadequate.
Reacting to the Finance Minister’s presser on Thursday, Minority Leader Haruna Iddrisu was convinced that Mr Ofori- Atta appeared to be living in another country.
“Our immediate response to the Hon. Minister of Finance is to state emphatically and unequivocally that he has lost touch with reality. He is not in tune with the state of the Ghanaian economy.
“Our economy today is one that reflects more than one crisis — cost of moving crisis, cost of living crisis and a cost of doing business crisis. Citizens, small and medium scale enterprises are unable to cope with the situation,” he bemoaned.
Adding his voice, the MP for Ajumako-Enyan-Esiam Cassiel Ato Forson said the new measures announced by the Finance Minister would not address the problems.
In a tweet, Mr Forson said, “The fiscal measures announced today are just cosmetic and Empty. It will further erode confidence in the economy. Govt should:
1. Place a moratorium on new loans
2. Cut 2022 foreign-financed projects by at least 50%!
3. And deliver on the promise to review all flagship programs!”
What is the current situation in Ghana
According to the Ghana Statistical Service (GSS), consumer price inflation hit 15.7 per cent year-on-year in February from 13.9 per cent in January this year.
In March 2021, the Finance Ministry indicated that the government had spent GH¢19 billion on the COVID-19 fight.
It also clarified that GH¢1.7 billion was spent on the COVID-19 Alleviation Programme (CAP1) and Emergency Preparedness and Response Plan.
There is pressure on the government due to rising public debt estimated to be GH¢351.8 billion as of the end of 2021, an increase by GH¢60.2 billion from the same period in 2020, according to the Summary of Economic and Financial data released by the Bank of Ghana in March 2022.
Meanwhile, total revenue mobilised within the period stood at 15.4 per cent of revenue, with tax rating registering a paltry 12.6 per cent of GDP, far below the regional average.
Even though crude oil supply bottlenecks have caused a surge in prices on the international market, the depreciation of the Ghana Cedi against other major currencies and taxes slapped on the product has worsened the situation.
There are about 12 taxes and levies on fuel which experts, the Ghana Trade Union Congress (TUC) and the Ghana Private Road Transport Union (GPRTU), have appealed for cancellation.
Transport fares increased by 15%, and barely a month later, fuel prices have shot up as high as GHC11 at some pumps, with fears of an impending rise in prices of goods and services.
Crude oil on the international market shot up as high as $130 per barrel following the Russia-Ukraine conflict.
At the beginning of 2022, petrol and diesel traded at an average GHS6.30 per litre at the pumps.
By March 2022, fuel prices crossed the GHS 8 per litre mark but are now being sold as high as GHS 11 at some pumps in the country, causing a surge beyond 18 per cent in the second pricing window of March.
Consequently, the government has announced 15 pesewas per litre reduction.
Also, the Finance Minister said the government would impress upon Parliament to fast track the passage of the E-Levy Bill, before April 2022.
The rationale, he explained, will help raise more revenues domestically.
The E-levy is a tax applied on transactions made on electronic or digital platforms.
The E-Levy is expected to generate an estimated amount of GH¢ 6,96 billion in 2022, GH¢7.89 billion in 2023, GH¢8.92 billion in 2024 and GH¢10.09 billion in 2025.
It is also one of the measures to increase the country’s tax to Gross Domestic Product (GDP) ratio from 13 per cent to 16 per cent.
But the Tamale South MP reiterated that his side would resist the Electronic Transfer Levy (E-Levy) any day it comes up for consideration on the floor of Parliament.
Find below other measures announced by the Finance Minister at the presser on Thursday:
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- The government plans to cut discretionary spending by an additional 10 percent. The Ministry of Finance is meeting with Ministries, Departments and Agencies to review spending plans for the rest of the year.
- There will be a 50 per cent cut in fuel coupon allocation for all political appointees and heads of government institutions to ensure efficient use of energy resources. This measure is effective April 1, 2022. Fuel coupons normally account for over GHS 60 million, according to the Finance Minister.
- The suspension of the purchase of imported vehicles for 2022 to reduce total vehicle purchases for the year. This will affect all new orders, especially Four-wheel drives.
- The suspension of all foreign travels except pre-approved statutory travels or critical travels.
- The government plans to conclude measures to eliminate ghost workers from the government payroll by the end of 2022.
- The government hopes to conclude renegotiation of the Independent Power Producer capacity charges by the end of the third quarter of 2022 to further reduce capacity payments by 20 percent to generate total savings of GHS1.5 billion.
- Moratorium on the establishment of new public sector institutions by the end of April 2022.
- Prioritise ongoing projects over new projects to enhance the efficient use of limited public funds by finishing ongoing or stalled projects.
- The reduction of expenditure on all meetings and conferences by 50 percent.
- Pursue re profiling strategies to reduce the interest expense burden on the fiscal.
- The government also plans to liaise with organised labour to implement measures in the Kwahu declaration of the 2022 National Labour Conference. These include reforms towards addressing salary inequities.
- Ministers and the Heads of SOEs will also be contributing 30 percent of their salaries from April to December 2022 to the Consolidated Fund.