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The Bolgatanga Central MP, Mr. Isaac Adongo, observed that Ghana's economy was suffering from a "brutal and repulsive fiscal consolidation" that is delaying the country's forward march and pushing it to the brink of crisis. a budget plan. crisis.
He cited the steady shrinking of public spending to cope with low revenues, the reduction of capital spending to consumer spending and the strong appetite for debt, as evidence of the suffocation of the economy on behalf of the world. fiscal consolidation.
He called for urgent and credible measures to help stimulate spending in the productive sectors, increase income generation and put an end to excessive spending on goods and services to stimulate growth and slow down spending in non-productive sectors. productive.
At a conference on the economy organized by the Coalition for Restoration (CFR), the MP, who is also a member of Parliament's Finance Committee, said the current budget consolidation of the government was artificial and unsustainable.
The event, which was honored by a former president and flag bearer of the National Democratic Congress (NDC), Mr. John Dramani Mahama, and other big figures of the NDC, was intended to give the party a version of the situation of the economy.
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Mr. Adongo and the NDC also used the event on the theme: "The state of the Ghanaian economy: myths and truths" to meet the plenary session of the management team Vice President Mahamudu spoke about Bawumia on April 3rd.
Disturbing trends
"This is worrisome because, by continually reducing spending to close the historical revenue gap, the government is delaying the advance of our beloved country with artificial and unsustainable fiscal results," said Mr. Adongo.
According to him, a good fiscal strategy should focus on mobilizing sufficient tax and non-tax revenues to finance critical expenditures.
This should be accompanied by investments in growth-critical spending, such as infrastructure, he told the Mensvic Hotel's conference room in Accra, which was full at crack.
"We do not live only day by day, but we borrow too much to pay for consumer spending," he said.
Prioritize consumer spending
The MP also pointed out that the government had emphasized the priority given to consumer spending over spending on much needed infrastructure.
"That's why we borrow not to build schools, hospitals, provide clean water and build our roads, but to pay wages, goods and services.
This is the new prioritization and efficiency of public spending, "he noted.
Mr. Adongo said that between 2017 and 2018, about 94% of tax revenues were allocated to the management of only two budget items: compensation of public sector workers and payment of interest on public debts .
He said compensation paid to public sector employees had increased significantly from GHG 14 billion in 2016 to GH ¢ 22.8 billion in 2019.
In nominal terms, he said, GH ¢ 8.8 billion has been added to the public pay bill.
"What the government does not know is that this reckless addition to the civil service deprives nearly $ 1.83 billion of fiscal space that could be used to fund infrastructure," he said. -he adds.
Loan of goods and services
Adongo said the government borrowed GH ¢ 7.63 billion to borrow goods and services, with a total loan forecast of GH ¢ 13.93 billion. pay by the end of 2019.
During the same period, he said that 16.43 billion GH ¢ had been borrowed to cover consumer expenditure consisting of workers' wages, the payment of interest as well as goods and services.
"By the end of 2019, the government would have borrowed a whopping 23.43 billion GH ¢ to finance consumer spending. In other words, we would have borrowed about $ 5 billion to pay workers, interest on loans and goods and services, "he said.
Reduction of capital expenditures
Mr. Adongo noted that the government has consistently cut capital spending from 2017 to 2018, reversing gains made by the previous government to significantly address the country's huge infrastructure deficit.
"In 2016, capital expenditures amounted to 7.5 billion GHGs, representing 4.5% of GDP. By 2018, this figure had been drastically reduced to 4.7 billion GH ¢, representing 1.8% of GDP. In fact, we are seeing negative investments in infrastructure in real terms compared to 2016 levels, "he said.
"This is the tax situation of our dear country now.
Unfortunately, the government is not stifling the potential of the economy by its erroneous political choices, it endorses future governments with unsustainable debts that will create no opportunity for repayment of income streams, "he added.
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