The Minority in Parliament have described the government’s demand for GH¢3 billion to supplement the 2014 budget as a sign that the economy is in dire straits.

According to them, the government had always insisted that the economy was robust and that its challenges would be curtailed with certain strategic interventions highlighted in the economic policy for the year, but unfolding events have proved that the economy was rather retrogressing, due to the failure of those measures.

“Mr. Speaker, the summary of all these is that the economy is much more troubled than the government itself imagined at the time the minister presented strategies for us to approve. So, obviously, those strategies have failed”, noted the NPP MP for Obuasi West, Kwaku Kwarteng, during the debate on the Mid-Year Review of the 2014 Budget Statement and Economic Policy of the Government of Ghana in Parliament yesterday.

Leading the onslaught from the Minority side, Mr. Kwarteng said what was more shocking in the government’s demand for supplementary budget was the gloomy picture it painted for the next six months without providing measures to curtail it.

He said per the dictates of the Finance Minister’s presentation on behalf of the President, economic activities expected to generate jobs for the rest of the year would be much slower than imagined with the growth rate of goods and services expected to decline.

That notwithstanding, the country is expected to overspend its budget by GH¢1.6 billion with tax revenue also expected to slump by 16.3% while the strength of the Cedi against major international trading currencies would continue to fall. Furthermore, he said interest payments were also expected to rise because of the government’s continuous borrowing attitude from both domestic and international markets.

“What we heard as strategies going forward were all recycled lip services. These old recycled lip services are those that have plunged us into the economic difficulties as we find ourselves now”, he said. To ensure economic growth, Mr. Kwarteng advised the government to be conscious about prudent management of the country’s scarce resources and spend wisely within its means.

He also advised the government to ensure that the rates of corruption at some state institutions were reduced to the barest minimum if not totally eliminated. This, the Obuasi West legislator argued, would save the country some money to pursue developmental projects that would inure to the benefit of its people.

Meaningless exercise

NPP MP for Wenchi, Prof. George Yaw Gyan-Baffour on his part described the GH¢3 billion supplementary budget being pursued by the government as a meaningless exercise, since “it will not in any way improve the well-being of the citizens of this country. “Mr. Speaker, it tells us that life is going to be very difficult for Ghanaians. All the economic indicators are trending in very dangerous deficits.

Our growth rate is projected to decline from 8% to 7.1%, even with oil. If you take oil out, it will even drop to 6.6% which implies that the almighty oil is only growing at 0.5%. This is very disturbing. “Prices of goods and services will continue to increase by the day. Inflation, according to the Minister, will rise to about 16% and government will continue to overspend, increasing the budget deficit from 8.5% to 8.8% despite all the claims of fiscal prudence and better Ghana. Mr. Speaker, this supplementary budget is a needless exercise”, he noted.

He said in order the keep the country running, the projection indicate that the government was going to borrow excessively from the domestic market and crowd out the private sector which has dire consequences on the private operators.

“Mr. Speaker, these operators are already facing difficulties with power outages, difficulties with non-availability of affordable credit, difficulties with poor and expensive transportation and cost and we going to add increasing rate because of the crowding effect.

Mr. Speaker, this government has failed the people of Ghana woefully and it is time for them to pack and go. According to the Wenchi legislator, the problems facing the economy were more structural and could not be resolved with text book fiscal and monetary policy prescription. “Because it is structural, you cannot just manipulate the open market operations just to try and stabilize the economy. For example, forex exchange depreciation cannot just be resolved by throwing more foreign currencies on the open market.

“Mr. Speaker, the depreciation has more fundamental cause. The demands for foreign exchange far exceed the supply – as simple as that. So, Mr. Speaker, the problem is that the solution is to find a way to reduce the demand constantly and to increase the supply.” According to him, if the government had opted to process crude oil at the Tema Oil Refinery, it wouldn’t have spent so much foreign exchange to import the commodity onto the market.

Such an exercise, he noted, was causing the country to lose US$20 on each barrel of finished crude oil imported into the country. “Instead of bringing in crude oil at say US$100 a barrel to be processed by the Tema Oil Refinery, equivalent quantity is brought in finished product at about US$120. “Mr. Speaker, the effect is that for every barrel, you lose US$20 that could have reduced demand for dollars.

Mr. Speaker, assuming we import one million barrels of finished crude oil, it means that we are throwing away about US$20million which could have been saved if we brought in crude and refined by Tema Oil Refinery”, he averred.

Turnaround

However, the Minister for Employment and Labour Relations and NDC MP for Tamale Central, Haruna Iddrisu, said despite the economic challenges, the government was optimistic that there would be a turnaround due to the pragmatic measures it was putting in place. He said though the performance of industry had not been the best due to erratic power supply, the intervention measures being pursued by the government would help address the problem.

He said to help alleviate poverty, the government intends using part of the US$1.5billion Chinese loan to support Youth Enterprise Development Fund.

Minister of State and NDC MP for Wa Central, Abdul-Rashid Hassan Pelpuo, on his part said the government should be commended for boldly confronting the challenges in the economy, other than the NPP that failed to confront the challenges and took the country to HIPC.