Francis-Xavier Sosu: 139% increase in national debt, deficit position and new taxes offer no hope for Ghanaians

Listening to Friday’s budget, I felt very ashamed and disappointed as a Ghanaian who had high hopes for the future. A national pandemic budget must offer hope and inspiration.

This budget does not inspire confidence for the future of Ghanaian youth. It kills the aspirations of start-ups and seeks to further worsen the plight of the poor and vulnerable through unpleasant tax regimes.

As a lawyer and student of economic policy, who finds me in the House of Lawmakers, my hope and aspiration is to support programs that would address systemic inequalities and give hope to young people.

Obviously, this budget did not give that hope. Not for me, the people of Madina, and certainly not for the business community.

7 new “killer” taxes

It is sad to note that in this era of pandemic, the government has imposed a Covid-19 health tax, increases in road tolls, the tax on games, sanitation and the tax on pollution (tax borla ), 1% increase in NHIL, 1% increase in flat rate VAT, increase in energy sector tax (ESLA) and financial sector clean-up tax.

According to basic economic principles, taxes contract the economy by reducing consumption and expenditure, increase the cost of business and result in high cost of products because the burden of the tax is transferred to the end consumer and ultimately leads to a loss. high inflation.

It is very insensitive that the government takes this approach in managing the economy because it is the ordinary Ghanaian who ultimately suffers. It’s certainly callous and dishonest, especially when the president took office promising to shift the focus of economics from taxation to production.

Deficit at 13.7% of GDP

The government has said that they are better managers of the economy and yet they are very dishonest in the face of the country’s deficit situation. The government says it resorted to borrowing because of Covid-19 and the need for austerity measures to reduce the impact of Covid-19.

However, the budget statement clearly exposed this lie peddled by the government – The current budget deficit, confirmed by the budget statement, is 13.7% of GDP. It is against the background that the government previously revised the budget deficit to 11.4% of GDP during the mid-2020 fiscal policy review, citing the impact of Covid-19. Even with this, the state of the budget shows that the budget deficit was 11.7% of GDP.

Again, the government, according to the budget statement, “ suspended the fiscal responsibility rules for fiscal year 2020 in accordance with Article 31 of the Fiscal Responsibility Law (Law 982) ”, which should have capped the deficit at 5%. Thus, the cap takes into account all public spending, including cleaning up the banking sector and any other major fake such as Covid-19.

However, Covid-19 was only 2.7% of GDP. Thus, there is now no doubt that the government’s claim to be better managers of the economy is not supported by its deficit position, compared to the record of the NDC which recorded a deficit of 7.8% of the economy. GDP not rebased as in 2016, in the absence of the law on fiscal responsibility (law 982), in the face of the management of the major energy crisis and in the face of the drop in world oil prices. The government must therefore admit that it resorted to reckless spending because of the 2020 election.

The outstanding debt has increased by 139% under this government in 4 years

It is also instructive to note that the current outstanding debt has increased from GHS 122 billion in December 2016 to GHS 291.6 billion in December 2020 – Thus, in four years, the outstanding debt has increased by one. a whopping 139 percent, especially under a regime touting ‘Ghana beyond aid’. It is very disappointing.

Audit of the Covid-19 Trust Fund

For the Covid-19 Trust Fund, the use of GHS 45,218,313.23 out of GHS 57,134,093.58 of funds raised should be verified to ensure prudent use of financial resources. How do we know this statement is true without an independent audit?

Being a government with a history of serious sagas of corruption and also known to have fought people who demand accountability, given what happened to the Auditor General, the Special Prosecutor and other notable journalists, the government will be good to allow an independent audit of the Covid-19 Trust Fund to reassure Ghanaians that the funds are being used wisely.

The construction of the National Cathedral during the pandemic is a misplaced priority

I am disappointed that the budget indicates that despite the pandemic, work on the National Cathedral continues, as work on the 88 hospitals promised and subsequently revised “ Agenda 111 ” as well as the 600 bed hostels promised for the kayayeis have not received serious attention. . Continuing to build a pandemic during a pandemic when you don’t have hospitals, adequate vaccines and medical supplies, and places to rest for vulnerable people like the kayayeis is a misplaced priority.

National rental system is good but requires wider consultation for effective implementation

While I support a national rental system in any way that can reduce the rent burden on young people, the program as presented in this budget does not provide ways to reduce the housing deficit that currently stands at around 2 million, according to estimates. of the Ghana Statistical Service (GSS).

The government must therefore implement Ghana’s Rent Act to allow monthly rent payments and not necessarily to help pay rent which should be the responsibility of citizens; and also seek to provide over 100,000 housing units per year to meet current housing demand. The government must engage stakeholders to develop a better way to implement a rent system that will be in tandem with our laws than what is provided for in the budget statement.

Concerns about student loans

When it comes to granting loans to higher education students, the question is why should students believe that a government that has not supported the payment of tuition fees for higher education students? higher education will put in place sustainable measures to keep this promise?

TSRP recipe for traffic congestion without dualizing main roads.

For the Transportation Sector Recapitalization Project (TSRP), what happened to the government’s plans to provide overhead trains to Accra to ease traffic congestion in the capital?

Again, providing hire-purchase agreements is a lazy way to tackle transportation challenges – in any case, roads need to be dualized and opened up to accommodate more vehicles before such policies are rolled out. The government, through this project, does not manage to do what is necessary, but rather engages in the imagination.

0.5% annual electrical coverage under this abysmal administration

For rural electrification, the government should have achieved 100% electrification of the country by 2020. However, the national electricity access rate was only increased from 84.98% to 85.17 % from January 2020 to December 2020, an increase of 0.19% alone.

However, from 2009 to 2016, electrical coverage increased from 55% to 83%, an average of 3.5% per year compared to electrical coverage from 83% to 85%, an average increase of 0.5 % per year under Akufo Addo administration. . In order to achieve 100% electrification, the average annual electrification rate must be increased from 2.6% to 4.4%, according to the Center for Global Development (CGD).

Conclusion

In conclusion, for a budget statement called “Wonya wor hien” Budget which seeks to offer hope for the future in order to provide all of the above desperation is very disturbing. For this budget to be progressive, it must stimulate the private sector and address the concerns raised in this article.

Young people need jobs, and the current economic environment reflects the downward trend in relevant global indices such as the ease of doing business ranking where Ghana has fallen from 114^e to 118^e compared to 108 of 2016^e; and the Economic Freedom Index where the government has obtained an average score of 57.28 over the past four years, compared to 78.63 from 2013 to 2016.

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The writer is a private lawyer, human rights activists and MP for Madina