Press Release

NPP

Part One

Part Two

CONTRIBUTION OF MINORITY LEADER, OSEI KYEI-MENSAH-BONSU ON BUDGET STATEMENT 2012

Madam Speaker, thank you for this opportunity to contribute to the motion on the Budget Statement for 2012.
The budget is the most important document that governments produce. It is a powerful tool in influencing economic and social development. The budget determines whether there is equitable access to services by different groups of the population such as women, children, the disabled, the poor and other minority groups.

Article 179(1) provides for the President to cause to be prepared and laid before Parliament estimates of the revenue and expenditure of the government of Ghana for the following financial year. Essentially, therefore, the budget is the President’s document. The President only clothes one of his Ministers with authority to present same to Parliament. A person does not send an emissary to deliver an important message and leave his home before the message is delivered. This is what our President, His Excellency John Evan Atta Mills has done. It is perhaps the first time in living memory that a President of this nation has so behaved.

Article 179(3) enjoins the Chief Justice to, in consultation with the Judicial Council, submit to the President both the estimates of the administrative and development expenditure of the Judiciary. 179(5) provides that the estimates of the Judiciary shall be laid by the President. It is interesting to note that Article 179(5) unlike Article 179(1) does not talk about the President causing to be laid before Parliament the estimate of the Judiciary. The article further provides that the President in laying the estimates of the Judiciary shall not revise or vary the figures but may submit any recommendations that he may have directly to Parliament. This house has as of yet not been served with any recommendations that the President has submitted to Parliament in respect of the budgets of the Judiciary,the Auditor-General and the Parliament. What is the state of affairs? Parliament ought to know.

As we learnt the other day at the post-budget workshop at Ho, following the preparation of the2012 budget, a cardinal principle of good budgeting is Comprehensiveness. The budget must cover all the fiscal operations of government encompassing all public expenditure and revenues to enable full and informed debate of the trade-offs between different policy options.

Government has succeeded in holding down inflation. However arrears due from Government to Ghana Commercial Bank, to SSNIT, to DACF, to GETFUND, to public sector employees, to TOR by way of subsidies on petroleum products, to Road Fund, remain humongous. If government pays the arrears what would be the effect on inflation, how would the currency react, in other words what will be the real value of the cedi.

It is important not to be selective but to be very comprehensive. The IMF’s world economic outlook for 2011 in respect of developing countries which includes Ghana, and in particular for Sub-Saharan Africa indicated that growth prospects was going to be very resilient for 2011 and 2012 propelled by high commodity prices, in our case, by cocoa, by gold and oil (ref. to par. 21 on page 9 of the Budget). The resilience which the Minister spoke about is notas a result of his prudent management, not any magic wand from him or from the so-called Better-Ghana mantra.
Similarly, oil-exporting economies in the region, i.e. those in stable production are predicted to grow their GDP by a percentage point over and above the 2011 growth rate. The Minister makes this admission in paragraph 27 of the 2012 Budget Statement on page 10. So if Ghana’s projected GDP growth rate is going to drop from 13.6% to 9.8% the Minister owes the nation a good explanation.

On inflation, government must be commended for staying on track. But again, what are the facts? The IMF predicted that in Sub-Saharan Africa for 2011 and 2012 inflation was going to be between 7 – 10% thanks mainly to moderation in food and energy prices as compared to 2007 – 2008 (ref. to para 28 & 29 of 2012 budget). In other words if inflation in Ghana had shot off the 7 – 10% mark it would have been very, very odd. Suitable conditions,according to IMF prevailed for this achievement, it is not a better Ghana agenda.

Second is predictability. Spending ministries, departments and agencies should have certainty about their allocations, especially in the area of capital investment, to enable them to plan ahead. Stable funding flows support planning and efficient and effective delivery. In critical areas like agriculture and industry, release of funds in 2010 and 2011 in the areas of investment amounted to less that 60%. How do we grow the economy with such epileptic releases? In the 2012 budget Statement the minister could not come clear on the $3 Chinese Development Bank (CDB) loan. Yet the $3 billion loan is the cornerstone of the 2012 development component of the budget. People are asking questions about infractions of the Agreement on the PRMA which provides that “……………..”. Provisions in the Agreement without equivocation indicate that the Agreement shall not be breach in of any local law. Clearly, there is conflict. How predictable is the $3 billion facility?
Third principle of good budget: transparency. All relevant information required for sound budgetary decision-making should be available in accessible form. Budget information need to be accurate, reliable and comprehensive. In the area of petroleum revenue,government has not been forthcoming with full disclosures of facts. First,government has failed to come to Parliament about what the allocations to GNPC were used exactly on against the pledge of the Minister of Finance last year. Second, the Minister is required to submit a report alongside the presentation of the current budget on oil. The Minister failed to do this. The Speaker ruled that this must be done. As I speak that has not been complied with. Also not compiled with is the excess in spending of the approval level of the supplementary budget.

Government has proposed amnesty for tax evaders up to December 31, 2011. On the face of it one could commend government for a bold decision. The people of Ghana however need to be informed about who are the big tax evaders which government has in mind. What total indebtedness are we looking at? Is it the case that some companies have collected taxes from employees and refused to pay, for instance? Just what is the nature and character of the skeletons in the cupboard. How far is it true that some of the defaulting companies are financing a particular political party and hence the reason for the amnesty. The public must know.

Fourth, public availability of the information – The public should be provided with full and not selective information on the past, current and projected fiscal activity of government. Information provided in the budget is a pick-and-choose one. When it suits government it quotes 2008 figures and juxtaposes with 2011 projections and 2012 anticipations. Other times they dig into 2005 and 2006 figures. Government projects a GDP growth rate of 13.6%. That on the face of it is commendable. But since government is hammering its chest for unprecedented performance, government should disaggregate the figures appropriately; what is the contribution of petroleum production.

If we remove the growth attributed to oil production, the growth in the non-oil economy would about 7%, less than 2007 and 2008 growth rates.

The WAMZ convergence criteria and Ghana having satisfied all the four primary convergence criteria. That is a good achievement and it is important for the other four countries, Guinea, Gambia, Nigeria and Sierra Leone to strive hard to enable the ECO to be introduced. If Liberia and Ghana migrate and there are problems which of the two could offer a bail out. Whilst we are that, it is important to learn lessons from the tsunami afflicting the countries of the Euro zone.

That notwithstanding, one thought that instead of the NDC government making it appear as if it is the Better Ghana Agenda that has led us on this course, it would have been better for government to have told us what the situation was from 2001 to 2008 in the other West African countries. In the 2011 budget, Dr. Dufuor chose not to talk about that: Ref. to Table 1 on page 13 of the 2011 Budget. From 1 in 2007 Ghana achieved 2 targets consistently until 2008 when she slipped. At that time it was only Gambia and Nigeria that in one year attained all convergence criteria. The two countries subsequently slipped. The others achieved 1 & 2 and no more. That was then. Yet selective as the Minister was he chose not to let the nation know where we have all come from.

Now there are two sets of criteria which measure a nation’s progress. There is a secondary convergence criteria. Please refer to page 13 of the 2011 Budget Table 2. The NPP administration moved from a zero achievement situation in 2000 to achieving 3 out of six in 2006 and 2007 and slipped to 2 out of 6 in 2008, an election year. Of the six secondary convergence criteria the NDC has dropped to achieving just one. And they claim they are doing better. Mr. Minister a key principle of a good budget is providing full not selective information to allow for sound debate.
In paragraph 59 of the 2012 budget the Minister tells Ghanaians that production of petroleum started in January 2011. However as a nation we know production started in December 2010. What happened to the quantities produced in 2010?

The fifth principle of a good budget is that, fiscal information shouldhave integrity. On page 20 the figure for total expenditure 2011 end-year projections including arrears clearance and tax refunds has been given as GH¢15,274.6 million. On page 27 the same figure has been given as GH¢15,565.5 million. The variation is GH¢290.9 million or ¢2.91 trillion. The question is has the ¢2.91 trillion been spent or has it not been spent? If it is has not been spent, how did it surface, if it has been spent how did it not appear and yet we had a balanced account.

Again, it is important to observe that two different figures have been quoted for the total expenditure component of the 2011 Revised Budget Estimates. In the table on page 20 of the budget Statement, the figure is given as GH¢12,938.0, on page 27 the same figure is given as GH¢14,397.4. The difference is GH¢1.459.4 million or ¢14.594 trillion. The question is, how come?

On page 42 we have different figures in paragraphs 147 and 148. It is indeed strange that on the same page of the budget, two paragraphs, one following immediately after the other should provide two different sets of figures. An analysis of the figures given makes very interesting reading. Paragraph 148 provides higher total petroleum receipts: GH¢1,240.88 million against GH¢1,239.82 million. The Receipts figure in paragraph 148 naturally earns much more royalty payments, GH¢240.73 million against GH¢236.87 million in paragraph 147 which is GH¢236.87 million. Carried and participating interest is GH¢628.92 against GH¢618.84. What is strange,however is that in paragraph 148 the higher receipt attracts a lower corporate tax of GH¢371.23 million against GH¢384.11 million.
In paragraph 784 it is stated that 32,358 Civil Service Staff were transferred to Local Government Service in 2011. Paragraph 818 provides that 30,000 staff were transferred. What happened to the 2,358 people. Were they paid? Where were they paid, how much have they been paid? Any incidence of double payment? A budget should have integrity.

The Minister has lots of explanation to do. The discrepancies, the inconsistencies, the wide off-the-wall expenditures, not to be philippic but charitable do mean that the 2011budget which provides the foundation for the 2012 budget was afflicted with common problems with budgeting namely; poor planning, poor expenditure control, weak cash management, ill-disciplined execution that leads to a large gap between the budget as approved and the budget as implemented. It also means inadequate accounting systems. It means the 2012 budget is foundationed on poorly organized and unreliable budget documentation.

Mr. Speaker, distinguished colleagues from the Ministry side have distinguished themselves in critiquing the various sectors of the economy. I do not intend to go through the motion again. I may want to emphasise four of the salient issues raised.

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