The Minority in Parliament has presented what they term, the true state of the nation address a day after President Akufo-Addo presented his maiden State of the Nation Address.
Addressing the press conference today [ Wednesday] Minority Leader, Haruna Iddrisu said the presentation on the state of economy presented by President Nana Akufo-Addo were not accurate.
Touching on the true state of Ghana’s economy yesterday, President Akufo-Addo said the “reality of Ghana’s finances are quite stark as a result of policy choices.”
President Nana Addo said “we find ourselves in the situation where Ghana’s total revenue is consumed by three main budgetary lines. Wages and salaries, interest and payments and amortisation and statutory payments.”
He added “This means that anything else that government has to do outside of these lines would have to be financed by borrowing or aid. After eight years of the previous government, there is practically no fiscal space left. The persistent resort to borrowing for any additional expenditure is also not sustainable. We cannot continue this way with our public finances. I will not allow this economy to collapse under my watch.”
Ghana’s economic growth he noted has declined significantly.
“Notwithstanding the record amount of financial resources of the disposal of the previous government, Ghana’s GDP growth in 2016, including oil, is estimated at 3.6 percent. This is the lowest GDP growth in about 23 years.’’
But responding to these statements, Haruna Iddrisu said, the presentation on the economy by the president was one-sided.
Below is the Minority’s position on the economy:
President Akufo Addo in his address yesterday, continued the propagandist path beaten by his Vice President in the run up to the 2016 elections on matters relating to the economy.
As if schooled on the subject by his Vice, the President showed that he was yet to come to terms with his new designation as President and came across more as a politician addressing charged party supporters on the campaign platform. Amidst several distortions, half-truths and outright untruths, the President painted the gloomiest picture imaginable of the Ghanaian economy.
While this may have worked for him in his bid to be elected President, it is not going to work as President because one is held to a higher standard the moment one assumes the high office of President.
Claims that may be overlooked in the past will come under swift and incisive scrutiny so that the Ghanaian people are not misled and fed with falsehood. Three main claims dominated his delivery on the economy.
First he claimed that all macro-economic targets under the IMF programme had been missed and this was the result of reckless expenditure on the part of the immediate past NDC administration. Curiously enough he failed to itemize this so-called reckless expenditure. This was clearly so because such expenditure as he described did not exist. The President also claimed that the NDC administration accrued 92% of our current debt portfolio which he pegged at GHc122 billion or 74% of GDP. He also repeated the false claim, first made by his Vice President that some GHc 7 billion had not been accounted for by the NDC administration.
Ladies and gentlemen of the media I wish to straighten the records on these claims once and for all.
The claims of missed deficit, growth and debt targets are unfounded and not based on the facts. First of all a budget deficit is essentially the difference between revenue and expenditure expressed as a percentage of GDP.
It stands to reason therefore that even if one kept to budgeted expenditure and run short of the required revenue, a deficit would arise which cannot be attributed to recklessness on the part of government.
The President himself unwittingly explained the issue when he indicated the shortfall between projected revenue for 2016 and actual revenue generated for that fiscal year.
This shortfall was the result of lower than expected oil production which itself arose out of an unforeseen breakdown of the FPSO and shortfalls in grant payments from donor partners.
These cannot be attributed to government’s act of omission or commission. The 9% budgeted deficit recorded for last year, while not what was projected at the beginning of the fiscal year, represents a significant reduction from the 11.8% recorded in 2012 and is certainly much lower than the 15% the NPP left in 2009 when exiting power.
With regards to the growth rate, it is important to stress that the Ghana Statistical Service, which is the primary source of data on economic management in Ghana and on whom even development partners rely for information on our economy, are yet to release figures for the last quarter of 2016, hence the figure of 3.6% quoted by President Akufo Addo can only provisional if not to create mischief for political gain.
We remember of course that political expediency led President Akufo Addo and his Vice President to constantly bastardize the GSS and it remains to be seen how they will relate to that institution now that they are in government.
Might I add also that the NDC holds the record for the highest ever growth rate in the history of Ghana when in 2011 this economy grew by 14.4% which at the time was the highest in the world.
Even the figures quoted by the President as the growth rate for 2016, is higher than the West African average especially when note is taken of recessions in the Nigerian and other economies. We remain optimistic that our projection in 2016 which was affirmed by the IMF and World Bank is attainable.
The President failed to acknowledge the high growth projections for this year by the IMF, World Bank and a host of other international bodies based on the gains made by the immediate past NDC administration.
On the IMF programme itself, we find it curious that President Akufo Addo did not repeat his emphatic statements on the campaign platform that he will review the programme because it was inimical to our interest as a nation.
Following on the heels of a revelation by the Minister for Monitoring and Evaluation, Dr Anthony Akoto Osei, that the NPP government was currently involved in negotiations to extend the programme to 2018, it should be clear that the Akufo Addo government has broken yet another campaign promise because reality has dawned on them Ladies and gentlemen of the media, I wish to turn attention and spend some time on the President’s claim about our debt position as a country.
For many years the NPP led by its then Vice Presidential candidate and now Vice President, Dr Mahamadu Bawumia have peddled a concocted a dubious debt calculation formula which seeks to paint a completely misleading picture about our debt profile.
President Akufo Addo merely repeated this dubious narrative yesterday in a bid to malign the NDC administration. What the two leaders have done is to quote a relatively small figure of GHC 9.5 billion as what they left in 2009 and quote a nominal GHC 122 billion as what currently represents our debt stock.
To the unsuspecting mind this would simply mean that GHC 112.5 billion or 92% of our current debt stock was accrued by the NDC administration. This is the false impression that the Akufo Addo/Bawumia government wants Ghanaians to have about our debt stock.
The reality however is that this kind of analysis is deliberately fraudulent and mere propaganda which has no basis in economics or logic. The truth of the matter is that a uniform formula has been used since time immemorial to asses our debt position as a country.
Ghana borrows in multiple currencies (Special Drawing Rights, Dollars, Pound Sterling, Euros among others) from foreign sources and cedis from domestic sources. Due to the need for uniformity of reporting, our debt is usually denominated either in dollars or cedis.
To know how much we owe in dollars, all debts irrespective of currency borrowed in, are converted to dollars at the exchange rate prevailing at the time of the assessment.
To convert it to cedis, it is then multiplied by the prevailing exchange rate of the cedi to the dollar.
To further illustrate this point, let us take the total debt stock of Ghana as at January 7th 2009.In dollar terms, it was US$ 8.075 billion dollars even after nearly US$4 billion was wiped off after the HIPC initiative.
At an exchange rate of US$ 1 to GHC 1.18 in 2009, this gave the much vaunted GHC 9.5 billion quoted by the President. Our current total national debt is US$ 28.37 billion which at a current exchange rate of US$1 to GHC 4.3 gives the GHC122 billion President Akufo Addo mentioned in his address.
The misleading claims about the contribution of the NDC to this debt stems from a mathematical and economic deception performed by Dr Bawumia when he holds the cedi constant from 2009 to 2016 and pretends that the US$ 8.075 billion left by his party in 2009 which forms part of the current US$ 28.37billion has not been affected by exchange rate movements over the last 8 years.
In actual fact the total contribution of the NDC to the national debt stock can be obtained by subtracting the US$8.075 billion left by the NPP from the US$ 28.37 billion dollars which represents our total debt at the moment.
This gives US$ 20 billion or GHC 87 billion and not the false figure of GHC 112 billion or 92% which Dr Bawumia and lately President Akufo Addo have been peddling. The NPP at the current exchange rate contributed GHC34.72 billion to the debt stock. They must own up to this and refrain from the revisionist politicking about our debt despite persistent corrections from the managers of the economy under the NDC.
It is a strategy of the NPP to deliberately ignore the fact that these monies borrowed have been used to finance the largest provision of economic and social infrastructure in Ghana’s history.
In the process real value was added to the economy and thousands of jobs created. No government has spent more to provide such critical infrastructure like roads, schools, hospitals, transportation, housing, water, and communications among others than the immediate past Mahama Administration.
This perhaps informs President Akufo Addo’s inability or unwillingness to speak about these crucial sectors in his address lest his party’s abysmal record in this regard be exposed. Without these important investments, all his lofty promises including one district one factory, Free SHS, One Village one Dam would not be possible.
It is ironical that having made such loud noises about borrowing and vowing not to borrow, the NPP has indicated its intent to borrow a colossal GHC17 billion from the domestic bond market in the first quarter of this year alone. This amounts to 14% of the entire debt stock owed by Ghana since independence. No greater betrayal of trust surpasses this manoeuvre.
While the President seeks to exaggerate our debt, we see major investments in the future of our country.Investment that would yield dividends for many years to come and benefit generations yet unborn.
Ladies and gentlemen of the media, In an unfortunate twist to this year’s SONA, President Akufo Addo repeated the inaccurate claim that GHC7 billion in government contracts were not budgeted for or disclosed to the then incoming NPP administration.
It is instructive to note that unlike Vice President Bawumia, the President did not say that the said GHC7 billion was money that had gone missing from government coffers. Be that as it may, in repeating this claim in whatever form, the President confirmed our suspicion that his men and women are yet to have a firm grasp of the new accounting system that is used to capture all government contracts.
We wish to place on record that contracts awarded by MDAs under the NDC administration have been accounted for and if the NPP government is having difficulty understanding the new contract database and its interpretation even after reportedly outsourcing the management of the economy to the McKinsey group, let them call for help.
Ladies and gentlemen, The President’s presentation on the economy was deliberately one-sided. He failed to balance his attacks on the record of the NDC’s management of the economy with candid admissions about significant gains made in the period under review. He failed for instance to speak about inflation.
This was a clear, albeit silent acknowledgment of the NDC’s superiority when it comes to keeping inflation under control. We are after all the party with the best record in terms of having the longest sustained period of single-digit inflation.
Since the last quarter of 2016, inflation has been on a steady decline falling to 13.3% in January, 2017 from 15.4% in December 2016.In December of 2008 when the NPP was exiting office, inflation was 18%. The President was also silent on the depreciation of the cedi which has become a major source of concern for the Ghanaian business community.
Whereas the cedi fell by only 9.5% in the whole of 2016, it has plummeted by 4.5% in the first month of the Akufo Addo/Bawumia government alone. To put this in perspective the cedi performed much better in an election year 2016 under the NDC than it did in 2008, another election year under the NPP when it fell by a catastrophic 25.3%.
Conspicuously missing in the President’s take on the economy was the performance of the Treasury bill rate under the NDC. From 24.5% in December 2013, the 91-day Treasury bill rate is now 16%. Nothing was heard from the President on several initiatives by the NDC government which have created new sources of revenue to support economic growth and help meet some expenditure items.
A case in point is the Sinking Fund established by the NDC government through which over US$ 350 million has been realised to help pay off the US$ 750 million Eurobond floated by the NPP in 2007. Mention can also be made of the Petroleum Funds which include the Stabilization Fund and the now famous Heritage Fund which the NPP government through its Senior Minister, had only last week hastily earmarked to fund the lofty Free SHS programme until public opprobrium forced them to beat a retreat in the matter.
This selective approach by the President when discussing the economy is symptomatic of the general lack of candour by the NPP in matters relating to the economy. Sufficient work had been done by the NDC to facilitate further economic growth and its consolidation. Acknowledging same will take nothing away from the President and his government.
The resort to thinly-veiled attacks on past regimes and the effort made to run down their contributions towards economic growth and national development as a whole has long since fallen out of favour with the Ghanaian public.
Ghanaians are not in the mood for convenient politicking and rampant excuse-making. They expect nothing more than fidelity to the many promises made by President Akufo Addo on the campaign platform and the fulfillment of same.
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