Despite last minute bipartisan meetings, the bill to fund the government until 16 February did not receive the required 60 votes.

It is the first shutdown ever to happen while the same party, the Republicans, controls Congress and the White House.

In response, the White House accused Democrats of holding “lawful citizens hostage over their reckless demands”.

“They put politics above our national security, military families, vulnerable children, and our country’s ability to serve all Americans”, spokeswoman Sarah Sanders said.

But Democratic Senate leader Chuck Schumer said President Donald Trump had turned down two bipartisan compromise deals and “did not press his party in Congress”.

It was unclear which way the vote would go as the midnight deadline approached, with Republicans and Democrats split on key issues.

The House of Representatives voted 230-197 on Thursday night to extend funding until next month, but the measure failed to pass the Senate by a margin of 50-49.

Five Republicans voted against the bill while five Democrats broke ranks to support it.

The last US shutdown happened in 2013 and lasted for 16 days, during which many federal employees took a forced leave of absence.

Many government offices will close as federal law requires agencies to shut down if Congress has not allocated money to fund them.

National parks and monuments are also likely to face closure.

But essential services will still run. These include national security, postal services, air traffic control, inpatient medical services, emergency outpatient medicine, disaster assistance, prisons, taxation and electricity generation.

In the hours before the vote, President Trump sounded pessimistic, tweeting that it was “not looking good for our great Military or Safety & Security on the very dangerous Southern Border”.
He invited Chuck Schumer, a fellow New Yorker, to the White House for last-ditch talks but they failed to find sufficient common ground.

Emerging about an hour later, Mr Schumer told reporters “some progress” had been made, but a “good number of disagreements” remained, including a difference in opinion regarding the Democrats’ desire to extend talks for another five days.

Blame game begins

Anthony Zurcher, BBC News, Washington

The game of chicken ended with a head-on crash.

Republicans are anxious to label this the “Schumer shutdown” and, essentially, they’re right. Senate minority leader Chuck Schumer and his fellow Democrats (with the help of a few Republicans) blocked a bill that would have kept the government open – at least temporarily.

Determining responsibility and apportioning blame, however, are two decidedly different endeavours.

Democrats will argue that they had a deal with the president on their bipartisan compromise that included immigration reform – only to have him back away during that fateful obscenity-laden Oval Office meeting last week. Republicans will frame this as liberals putting undocumented immigrant protections over military readiness and health insurance for poor kids.

The blame game began at midnight, and the winner has yet to be decided. Generally, the loser in these types of showdowns is the party entering the fight with the lowest popularity – bad news for Mr Trump and the Republicans.

The good news, for both sides, is that their political bases will be thrilled they are playing hardball. Midterm election years, like 2018, tend to encourage this kind of rally-the-base manoeuvres.

Now that the line has been crossed, this could become a protracted, ugly fight.

What’s the problem?

The main bone of contention has been Democrats’ demands for more than 700,000 undocumented immigrants who entered the US as children to be protected from deportation.

These “Dreamers”, as they are known, were granted temporary legal status under a programme established by former President Barack Obama.

In September, Mr Trump announced he was ending the programme and allowing Congress until March to come up with a replacement.

The Republican president and congressional conservatives have been using the issue as a bargaining chip in an attempt to wring concessions from Democrats.

Mr Trump wants funding for tough new border controls, including his proposed US-Mexico wall.

Republicans added a sweetener to the bill in the form of a six-year extension to a health insurance programme for children in lower-income families.

But Democrats want this programme extended permanently.

The legislative negotiations went up in flames last week after Mr Trump allegedly complained the US was letting in immigrants from certain “shithole countries”.

What could be the political fallout?

Neither party wishes to be held accountable for closing the government as midterm elections loom in November.

A Washington Post-ABC poll taken before the vote suggested that by a 20-point margin more Americans blame President Trump and his party for the imbroglio, rather than Democrats.

But the shutdown is problematic for 10 Democratic senators who are up for re-election this year in states won by Mr Trump.

How did we get here again?

They are likely to face voters this autumn amid a hail of attack ads claiming they closed the US government to help illegal immigrants.

Democrats will hope to focus criticism on the president and the Republicans’ ability to govern.

What happens in a shutdown?

Many federal agencies will close down but essential services will continue to run.

US Defence Secretary Jim Mattis said that over 50% of his department would not go to work, and some maintenance, training and intelligence operations would come to a halt.

National parks and monuments could face closure, which provoked an angry public reaction during the last shutdown in 2013.

Prior to the vote, the Trump administration was reportedly making contingency plans to keep the national parks running if no deal is reached.

Visa and passport processing could also be delayed.
–
By: BBC

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The relevance of the Ministry of Special Development Initiatives has been questioned after its 2018 budgetary allocation was found to be at least five times bigger than other key ministries like Works and Housing and Sanitation.

[contextly_sidebar id=”SmELo1DFSTF8ryuODmUxSajOK7Ltghce”]The Ministry also came under fire over its allocation of GHc800,000 for the creation of a website.

It has since clarified that the website amount was a typographical error, but not before the Minority in Parliament raised concerns that it was an attempt to fleece the state of funds.

Government in a statement acknowledged that though public scrutiny on the said budget is necessary, it is equally relevant  for the media and other stakeholders to focus on “official final appropriations, as well as what the actual processes” are, instead of “sweeping statements and categorizations which are not informed by the actual official processes and amounts.”

Government in the statement also clarified what it described as misconceptions surrounding the development.

The statement from government is below:

STATEMENT ON THE 2018 BUDGET OF THE MINISTRY OF SPECIAL DEVELOPMENT INITIATIVES

Government has taken note of the public discussions generated over the 2018 budget estimates of the Ministry for Special Development Initiatives. Whilst commending the interest shown by Members of Parliament, sections of the media, and citizens, in ensuring that the State is efficient in its expenditure, it is important, however, to reject the false claims by some that the Ministry’s budget intention is to misappropriate or misapply state funds in this case.

1. The matter of the Actual appropriated amounts

The process of budget preparation requires initial estimates, setting of expenditure ceilings by the Ministry of Finance, and the passing of appropriated ceilings by Parliament. It is important to note that, in this case, the final Appropriations Bill, as passed by Parliament, has set forth the true picture, which is significantly different from the document in circulation. The Appropriated Bill is available on the Ministry of Finance’s website. For example, regarding the Community Water Systems, ambulances and school facilities (including classroom blocks with ICT centres and other amenities), government notes that the projected costs as submitted by the Minister and approved by Parliament are within the market competitive range for such projects. For example, per the specification given the Ministry by the Ghana Ambulance Service, it costs between one hundred thousand and one hundred and fifty thousand United States Dollars to purchase one ambulance. The United States Dollar equivalent of what the Minister stated in the budget is 80,000 Dollars. The kind of water system that is envisaged under this programme has cost other institutions as much as GH¢167,000 to build. In any event, when the Development Authorities are in place, they will be responsible for the execution of these projects based on competitive pricing. The public will be better served if discussions on this matter are based on the official final appropriated amounts, which are those which bind the public purse.

2. The matter of How much has been appropriated to the Ministry vrs How much is appropriated to the Development Authorities

The Development Authorities’ Bill (to be signed into law this week) empowers the development authorities to “co-ordinate the planning and implementation of integrated development activities at the constituency level for the realisation of the strategic goal of each development zone.” Each of the Development Authorities will have a  Governing Board that will be responsible for the approval of annual operatives plans and budget of the Authority and review the quarterly performance of the Authority, including statement of accounts of money’s disbursed from the funds of the Authority. The Minister for Special Development Initiatives therefore plays only a supervisory role over the Development Authorities and, thus, does not execute their projects and programmes directly. Accordingly, out of the over GH¢1 billion that is at issue, only GH¢1.5 million is available to the Ministry directly; the rest of the amount is only an appropriated ceiling made available in the 2018 Budget for the three Development Authorities to validate, properly budget with, plan and execute their on-ground projects, once established. The Development Authorities would be required by the Public Management and Financial Act (PFMA) to adhere to strict procedure as outlined by the law, and which aims to prevent wastage and dissipation of public funds.

3. The matter of whether or not the Development Authorities Concept will amount to wasteful administrative expenditure

The establishment of the three Development Authorities is to ensure a bottom-up approach to development, which takes control of local development away from a central authority. With the establishment of the three development authorities, part of the yearly national allocation for capital expenditure, will be taken and directly allocated to all 275 constituencies across the country to be administered by the Development Authorities to ensure that the traditional inefficiencies of centralized capital expenditure is cured. The balance of GH¢1.198 billion has now been approved for the Authorities to develop projects with and expend accordingly commencing with the 2018 budget. The establishment of the Development Authorities to administer expenditure of the equivalent of $1 million per constituency was a specific manifesto commitment of the ruling New Patriotic Party, as amplified by several pronouncements of its presidential ticket in the 2016 election campaign, and government is determined to implement to the letter this vision which will ensure equitable distribution of amenities and opportunities to every community up and down the country.

4. Protecting the Public Purse

Now that appropriation is complete, there are enough safeguards to ensure that value for money audits are conducted at each procurement stage when the Development Authorities are established and commence their work. The Public Financial Management Act requires processing such as issuance of commencement certificates (which require benchmarking of projected expenditures). The Procurement processes additionally require value for money assessments. The processes for releasing funds at the Finance Ministry since 2017, in strict accordance with the PFMA have been extremely diligent leading to huge savings to the public purse this year, a reason for which government has been accused for not spending enough. The processes will continue to remain extremely disciplined in 2018 and beyond, and are the ones that really determine how safe the public purse is.

5. Conclusion

Whilst we acknowledge that such public scrutiny, especially of budgets, helps to ensure the protection of the public purse, we would urge, especially media practitioners, to focus on the official final appropriations, as well as what the actual processes are, including the inherent checks and safeguards therein. Sweeping statements and categorizations which are not informed by the actual official processes and amounts, will lead to flawed analysis, which is unhelpful to Ghanaian democracy.
……signed……

Mustapha Abdul-Hamid

(Minister for Information)

–

By: Marian Ansah/citifmonline.com/Ghana
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According to the Minority Spokesperson on Finance, Cassiel Ato Forson, the items to be spent on, including renovation of the Flagstaff House and the Peduase Lodge, aren’t a priority as compared to other pressing needs of the country.

“I do not see the priority so clearly. We live in a country with a government that has promised so much and one would have thought that because they promised so much there would be that focus, but I am not seeing that. It is the expenditure that will give me some direction on where the country is going, but unfortunately the direction is consumption. The direction is not something that will drive the growth that we need.

“In the 2018 budget, we have been told the office of the President alone is spending 272 million Ghana cedis on goods and services , of which the office of the Chief of Staff alone is spending 172 million out of the 270 million. They are saying out of that, they are spending 100 million cedi for capital expenditure of which they are going to use part of it to renovate Peduase Lodge and Flagstaff House and some other lodges too. You will not understand it until you put it in context,” Mr. Ato Forson said.

He further indicated in a statement that “within the space of 9 months, the office of the President spent a total of about 76 million cedis on goods and services” adding that “69 million cedis of this amount was spent at the office of the Chief of Staff, and 4 million new cedis at the Vice President’s Secretariat.”

Mr. Forson believes “the immediate effect of the wasteful expenditure at the presidency is that, key growth sectors are denied resources to spur economic growth and development.”

But the Deputy Information Minister, Kojo Oppong Nkrumah in response said the Minority’s claim is misleading.

“That is not true, and often our argument is that, when these issues are raised, the devil is always in the detail. If you go to the government machinery, it has 22 different agencies under it. From the GIPC to MASLOC to all of them.The view was that the 100 million Ghana cedi CAPEX budget [and this is the view that was brought to us from the Executive here in Parliament that it] is all lumped together and it sits at the office of government machinery and the office of government machinery will then do its allocation to the 22 different agencies.

“It is not true that GHC 100 million will be used to rehabilitate Peduase Lodge. If you read the budget carefully, it says the various agencies under the office of government machinery are all going to tap into that capital expenditure budget, for their various CAPEX functions.”

Parliament rejects GH¢6m budget for Senior Minister’s office

Mr. Forson’s concerns come days after budgetary allocation for the Senior Minister’s office was rejected in Parliament.

The Minority, which the led the motion, had said the office was not a legal creation and therefore could not be allocated any funds from the national budget.

Leading the charge for the rejection was Minority Leader, Haruna Iddrisu who argued that the Senior Minister’s office is expected to coordinate the activities of other Ministries, Departments and Agencies and thus cannot be treated as a separate Ministry without legal backing.

“It is either the President has not done that which is legally appropriate because I am holding with me the Executive Instrument (EI 28) Civil Service Ministry Statement 2017, signed by Nana Addo Dankwa Akufo-Addo, the President of the Republic of Ghana which creates the various Ministries and conspicuously lost in this list, is office of the Senior Minister so it means that the portfolio of Senior Minister is only being held morally , but legally he [President Nana Addo] has no locus and if the President must do what is legally appropriate to create the office by the Executive Instrument unless a different instrument is issued to that effect,” Mr. Iddrisu argued on the floor of Parliament.

–

By: Marian Ansah/citifmonline.com/Ghana
Follow @EfeAnsah

The post GHC100m capital expenditure for presidency outrageous – Ato Forson appeared first on Citi 97.3 FM - Relevant Radio. Always.

On the whole though, the budget has been fairly well received by those who understand what budgets really are. Indeed, on paper it appears well conceptualized, seeking to achieve a prudent compromise between fiscal consolidation and the acceleration of Ghana’s faltering economic growth.

However the national budget is no more than a statement of intent whose implementation rarely goes quite according to plan. Indeed, the out turn for 2017 illustrates this vividly. While government has commendably kept to its key target of keeping the fiscal deficit down to 6.3% of Gross Domestic Product, this has been at the expense of a lot of public spending programmes aimed at restoring the country’s economic expansion. Even key policy initiatives towards private sector growth such as one district one factory, provision of  venture capital and economic stimulus for distressed yet viable enterprises suffered from severe public expenditure cut backs because of financing constraints.

While we understand the inevitable implications of these constraints and indeed sympathizes with government in this regard, financial experts disagree with officialdom’s strategy of refusing to own up to these, preferring instead to be over ambitious in the name of fulfilling its 2016 election campaign promises. The 2017 budget suffered over this and it is likely that the 2018 will suffer the same fate to some degree.

Importantly, this strategy is generating friction between government and the International Monetary Fund, which questions the credibility of some key budget targets, particularly those relating to tax revenues. Instructively, the success of the 2018 budget as a whole rests on government’s ability to meet those targets. Like it did in March this year when unveiling the 2017 budget, government has reacted to widespread doubts as to its ability to meet its revenue targets with assurances that it can; however the admission that it will end this year some 9.3% short of its revenue targets is more instructive than those assurances.

Lofty ambitions can be a good thing – at least they keep everyone involved in meeting the budgetary targets on their toes – but emphasis on false propaganda  about actually meeting them is not helpful in any way. Here it is illustrative that even minutes before Finance Minister Ken Ofori Atta admitted to the 9.3% revenue shortfall, members of the NPP communications team were going round the various electronic media who had set up at Parliament house to cover the budget presentation, confidently declaring live on air that the revenue shortfall for this year is 5%, and that is better than the performance of its predecessor administration in this regard.

Despite the capping of allocations to statutory funds, Ghana’s budget is still very rigid with most public spending inevitable going into recurrent expenditure and interest payments. This leaves very little for the discretionary expenditures on the programmes which the 2018 budget claims will turn Ghana’s economic fortunes around; if cuts become necessary as they have been this year, those programmes will again be under-funded except in the claims of the NPP communications team as has largely happened in 2017.

The difference between this year and next year though is that in 2017, most of the initiatives aimed at reviving economic growth were still in their planning stages and so expenditure cuts have not been crucially debilitating. Next year though similar expenditure cuts would effectively lead to the postponement, if not outright cancellation of those initiatives. For instance companies to receive financial stimulus support have been identified as  projects to be established under the one district one factory programme.  If government cannot provide the requisite funding such programmes would grind to a halt in 2018.

This is a real possibility even as government has risked the ire of the IMF – and with it a reluctance by the Fund to endorse Ghana’s economy to the international financial community that it is still critically reliant on – because it has opted for a slower fiscal consolidation than the Fund’s Extended Credit Facility programme called for in its final year. If  government  is not able to fund the initiatives supposed to expand the economy more rapidly this will have been for nothing. I want to believe this will not be the case.

However I can see the real cause to worry over the gamble the government is taking. While positive media spin can cover economic performance shortcomings – at least temporarily – among the lower market segments it cannot among the economic decision makers both at home and abroad.

Which is why government, having devised a very ambitious 2018 budget, will have to ensure it derives the requisite revenues to finance it. Any thing else will turn what looks to be a good budget on paper into a fiasco in reality.

The other key issue has to do with the expected growth for 2018. The Gross Domestic Product (GDP) for 2018 is expected to slow compare with 7.9% growth forecasted in 2017.

The real GDP is expected to grow by 6.8 percent in 2018, while real non-oil GDP is expected to grow by 5.4 percent over the same period.

The overall growth takes into account the anticipated reduction in petroleum output as a result of planned maintenance works scheduled for 2018.

While the overall projected growth for 2018 is lower than that estimated for 2017, the non-oil projected growth which is 5.4 % for 2018 is higher than that estimated for 2017 which was 4.8%, on account of government’s intervention in the non-oil sectors of the economy.

Real GDP is projected to grow by 7.3 percent and 5.6 percent in 2019 and 2020 respectively, yielding an average growth of 6.2 percent over the medium term.

Agriculture is expected to grow by 4.5 percent in 2018, largely driven by a strong growth performance of 4.5 percent in the Crops subsector. Growth in Agriculture is expected to be 5.8 percent, 5.0 percent and 5.3 percent in 2019, 2020 and 2021, respectively. The sector is expected to record an average growth of 5.2 percent over the medium-term.

The Industry Sector is expected to grow by 9.4 percent in 2018 compared with 17.7 percent estimated for 2017. Growth in Mining and Quarrying is projected at 17.9 percent, with upstream petroleum, the dominant component of the subsector, projected to grow at 23.4 percent.

Over the same period, Manufacturing and Construction are expected to grow by 4.6 percent and 4.1 percent, respectively.

Industry is projected to grow by 9.5 percent, 5.1 percent and 1.2 percent in 2019, 2020 and 2021, respectively, resulting in an average of 6.3 percent over the medium-term. The Manufacturing subsector is expected to remain on arecovery path, having experienced a contraction in output at the height of theenergy crisis.

The subsector is projected to record an average growth of 5.1percent over the medium-term, aided by a continued normalization of power supply. Over the same period, Construction is also expected to pick up, achieving an average growth rate of 4.7 percent.

The Services Sector is projected to grow by 6.2 percent in 2018, with Information and Communication expected to be the leading subsector recording a growth of 15.9 percent. Education is projected to grow at 8.1 percent, while Health and Social Work is projected to grow at 5.7 percent.

The Services sector is expected to grow by 6.5 percent and 6.1 percent in 2019 and 2020 respectively. Overall, the sector is projected to grow at an average rateof 6.6 percent over the medium term. It is expected that service delivery will be generally enhanced by attempts to achieve greater formalization of the economy, while trade activities will continue picking up in response to a fairly stable exchange rate.

The government must put in good policies that would propel a continued growth.

–

By :  Alhassan Farihan

The post The missing link in 2018 Budget [Article] appeared first on Citi 97.3 FM - Relevant Radio. Always.

The Minority, who had expressed opposition to the budget statement since it was laid in Parliament, abstained from the vote.

[contextly_sidebar id=”ZWqVJCy27yil5V4m5bKHetXRnG0TUorV”]The various Committees in Parliament will now be tasked with assessing the estimates and allocations made to the various sectors in the budget.

The Majority Leader, Osei Kyei Mensah Bonsu, praised his colleagues from both sides of the House of subjecting the statement to intense scrutiny before it was passed.

“I want to show appreciation to my colleagues in the House, Majority and Minority for the scrutiny that they applied to the budget before us. We are going to deal with the estimates and I want to implore all my colleagues to be in attendance at all the Committee meetings in order for us to be able to deal with the estimates that have been given to the various Committees,” he said.

The Minority had earlier called for the budget statement to be withdrawn arguing that the government had reviewed some key economic targets without recourse to the House.

A former deputy Finance Minister, Cassiel Ato Forson, had said that “the Minister responsible for Finance cannot revise the expenditures and revenue without parliamentary resolution.”

He also said the government’s budgetary allocation for the Nation Builders’ Corps was “nothing to write home about.”

He also noted that the Minority’s calculations indicated that, each of the 100,000 youth to be recruited under the program, would receive a little over GH¢400, which is woefully inadequate.

“Mr. Speaker, the said graduates will not take home more than GHC400, this is dangerous. Mr. Speaker, that GHC600,000 they intend to fund the programme with is not coming from the government of Ghana. It is going to be taken from the district assembly common fund. You’re going to constrain the district assemblies just for the purpose of funding it. This, in my opinion, is an extension of the national service scheme,” he said.

‘Go to court’

However, the Majority, unperturbed by the concerns that had been raised by their colleagues, dared the Minority to go to court if they remain convinced that the 2018 Budget breaches the laws of the country.

“When we pass an appropriation, we say that ‘spending not exceeding’, meaning the Minister of Finance can spend up to the appropriation, so if it is that he does not spend up to appropriation does he have to come back to Parliament? No! If it were the case that he exceeds the appropriation, then he has to come back to Parliament, but he has not exceeded the appropriation. In the mid-year review on 31st July, we decided that it is a statement and should not come by way of motion, but if he [Ato Forson] is saying that it was unconstitutional and he has stayed all this while waiting for a budget before, then you are doing a disservice to the nation, and the proper forum to test that one is the Supreme Court,” the Chairman of Parliament’s Finance Committee, Dr. Mark Assibey Yeboah said at the time.

Deputy Finance Minister,  Kwaku Kwarteng also dismissed the issues raised by the Minority, arguing that the government cannot premise its budget on the previous one passed by Parliament, while ignoring the realities on the ground.

“The point that we should have rather premised the 2018 budget on the 2017 budget passed by Parliament and we should have ignored the realities and we should not have built future plans on the basis of today’s actuals is a very strange proposition.

“ You do your budget on the basis of ‘actuals’ because going forward, you want to plan on the basis of reality so for anyone to suggest that because you did midyear review and Parliament did not approve of it, then you are unable to do 2018 budget statement because you would have premised it on the mid year review projections is flawed,” Mr. Kwarteng argued.

About the 2018 budget

Ken Ofori-Atta on Wednesday, November 15, 2017, presented the Akufo-Addo government’s 2018 Budget Statement and Economic Policy to Parliament.

The budget highlighted results from the government’s policy programmes over the past few months,  and announced the government’s planned developmental programmes for the next fiscal year.

Among the major programs to be rolled out by the government in 2018, are tax reliefs for private universities, tax holidays for young entrepreneurs, proposed 13% to 21% reduction in electricity tariff for residential consumers, the establishment of nation-building corps and operationalization of the Special Prosecutors’ office.

The budget, christened the ‘Adwuma Budget’  focuses mainly on revenue mobilization through strict tax collection modules and job creation.

–

By: Edwin Kwakofi & Duke Mensah Opoku/citifmonline.com/Ghana

The post Parliament approves 2018 budget statement despite Minority’s opposition appeared first on Citi 97.3 FM - Relevant Radio. Always.

This, they say, is due to government’s disregard for the provisions of the Public Financial Management Act, which requires the regular submission of intelligence reports on the security situation in the country to Parliament.

[contextly_sidebar id=”ZLNnqD299P2p2IHMvzRqMTUAdbeiKYwa”]According to Minority Spokesperson on Interior and Defense, James Agalga, the government has no justification for flouting the law hence their intended action.

“Upon the elevation of the Secretariat of the National Security Council into a full fledged Ministry, I believe what was within the contemplation of his excellency the President was to ensure that the intelligence agencies of state are accountable to this house. The enabling Act for the existence of the Ministry for National Security, specifically requires it to report to this house on their activities to make it possible for this house to exercise its oversight responsibilities.

“Unfortunately, Mr. Speaker, they have omitted to discharge this function, thereby making it impossible for us to assess their performance as stipulated under the Public Financial Act 2016. This is an unpardonable violation which makes it difficult to asses their budget estimates. In the absence of that report, I am submitting that we cannot consider the budget estimates of the Ministry for National Security.”

Withdraw budget – Minority 

The threat comes days after the Minority admonished government to withdraw the budget because they claim the Finance Minister reviewed aspects of the last budget in July without a resolution of the house; an act they term unlawful and must lead to nullification of the 2018 budget.

The Minority Spokesperson for Finance, Ato Forson, who made the call in a submission on the floor of Parliament, said “The Minister responsible for Finance cannot revise the expenditures and revenue without parliamentary resolution.”

He also said the government’s budgetary allocation for the Nation Builders’ Corps was “nothing to write home about.”

He noted that the Minority’s calculations indicated that each of the 100,000 youth to be recruited under the program would receive a little over GH¢400, which is woefully inadequate.

“Mr. Speaker the said graduates will not take home more than GHC400, this is dangerous. Mr. Speaker that GHC600,000 they intend to fund the programme with is not coming from the government of Ghana. It is going to be taken from the district assembly common fund. You’re going to constrain the district assemblies just for the purpose of funding it. This, in my opinion, is an extension of the national service scheme,” he said.

The Majority however called the bluff of the Minority , daring it to go to court for redress if they are convinced that the 2018 Budget breaches the laws of the country.

–

By: Marian Ansah/citifmonline.com/Ghana

The post Minority threatens to boycott approval of National Security budget appeared first on Citi 97.3 FM - Relevant Radio. Always.

The Minority Spokesperson on Finance, Cassiel Ato Forson, who made the call, had stated that government had reviewed some key economic targets without recourse to the House.

[contextly_sidebar id=”M5Z8p3dKwen9XewuIXaV46Tl3cL4GI7Z”]According to him, “The Minister responsible for Finance cannot revise the expenditures and revenue without parliamentary resolution.”

Mr. Kwarteng however dismissed these suggestions, saying the Minority’s argument is flawed since government cannot premise its budget on the previous one passed by Parliament, while ignoring the realities on the ground.

“The point that we should have rather premised the 2018 budget on the 2017 budget passed by Parliament, and we should have ignored the realities and we should have not built future plans on the basis of today’s actuals is a very strange proposition.

“You do your budget on the basis of actuals because going forward, you want to plan on the basis of reality so for anyone to suggest that because you did midyear review and Parliament did not approve of it, then you are unable to do 2018 budget statement because you would have premised it on the mid year review projections is flawed,” Mr. Kwarteng argued.

About the 2018 budget

The Minister of Finance, Ken Ofori-Atta, on Wednesday, November 15, 2017, presented the Akufo-Addo government’s 2018 Budget Statement and Economic Policy to Parliament.

The budget highlighted results from the government’s policy programmes over the past few months, and announced the government’s planned developmental programs for the next fiscal year.

Among the major programs to be rolled out by the government in 2018, are tax relief for private universities, tax holiday for young entrepreneurs, proposed 13% reduction in electricity tariff for residential consumers and 21 for industries, the establishment of a nation-building corps to offer jobs to graduates, and operationalization of the special prosecutors’ office.

The budget, dubbed the ‘Adwuma Budget’ [Job’s Budget], focuses mainly on revenue mobilization through strict tax collection modules and job creation.

–

By: Marian Ansah/citifmonline.com/Ghana
Follow @EfeAnsah

The post Minority’s call for budget withdrawal flawed – Kwaku Kwarteng appeared first on Citi 97.3 FM - Relevant Radio. Always.

Imani’s preliminary budget analysis examines the key policies, programmes and how allocations to the various projects will affect key sectors of the economy. Critical questions were asked as well as policy recommendations to fill the gaps identified.

ECONOMY

Ghana’s economy has achieved relative stability and appears to be on a trajectory to recovery

after the numerous challenges it experienced in the past few years. The much talked about debt reprofiling seems to be yielding some positive results as debt to GDP ratio has improved from 73 percent in December 2016, to 68.3 percent as at September 2017. GDP Growth outlook for 2017 is also set to exceed its target by about 160 basis points. At the same time, fiscal deficit is within range of the target even in the face of revenue shortfalls – a fiscal deficit of 4.6 percent of GDP has been projected for 2017 against a target of 4.8 percent of GDP. A careful analysis of the revenue performance and the expenditure management for 2017 reveals an impetus to ensure fiscal discipline. In the thick of revenue mobilisation challenges, the incumbent government has spent below estimated expenditure levels. This action undeniably contributed to keeping Ghana’s debt below unsustainable  levels (70 percent of GDP). All the above has contributed to the positive ratings Ghana enjoyed in the recent Standard and Poor’s outlook review of the Ghanaian economy. The positive rating will augur well for the economy as it can attract investors to support both the industrialization drive and the infrastructure agenda of the government.

While meeting fiscal deficit targets has its advantages, constraining expenditure to achieve it presents challenges of its own. With a dominating wage bill and numerous social intervention programmes, expenditure cuts unfortunately mean reduction in growth catalyst items like capital expenditure. In the 2017 budget, the wage bill, which is the highest component of expenditure, was 30.68 percent of total expenditure. In the face of revenue shortfalls, actual compensation expenditure was still above the allocated amount by about 2.64 percent. Interest payments, the next biggest item was about 25.4 percent of total expenditure with grants^[1] to other government units following with 18 percent, which increased to 20 percent (in the revised budget) even in light of expenditure cuts. Capital Expenditure (CAPEX), which followed with 13.6 percent was later revised to 12.35 percent. However the government is projecting to spend only 8.8 percent (29 percent less than intended) in view of the expenditure cuts. In the 2018 budget, CAPEX is expected to be 11.25 percent of total expenditure with compensations at 32 percent and grants to other governmental units at 19.7 percent.

Government in addition to intensifying its revenue mobilisation efforts, must consider finding efficient and innovative ways to include the private sector in the provision of these social programmes. Also, the proposed revenue measures such as the intended reform of the custom warehousing regime and transit regime, if carried out efficiently and timely, can potentially improve revenue mobilisation.

Inflation has also been on the decline since September 2016 – it has fallen from 17.2 percent to 11.6 percent as at October 2017, on the back of stable electricity supply and a relatively stable Ghana cedi (the Ghana cedi depreciated by 4.42 percent as at September 2017 against a depreciation of 9.6 percent in 2016 against the US dollar). As part of projections for next year, the government has projected an average inflation rate of 9.8 percent and end year inflation of 8.9 percent for 2018. While achieving this target can encourage savings and investments as returns on investments are preserved, provision of a stable and reliable electricity supply, delivery on its promise to  reduce electricity tariffs, the significance of the reduction in terms of its impact on cost of production and continuous stability of the Ghana cedi will be imperative. A strong US dollar could also challenge the stability of the Ghana Cedi which can affect the achievements of the set inflation targets.  It is recommended that government consolidate its  efforts to provide more stable and reliable power supply. Government must also increase efforts to improve the consumption of locally manufactured products. In this regard, the government’s decision to allocate 70 percent of all government contracts to local contractors and suppliers though commendable, will require strict enforcement to achieve intended results.

Interest rate

In a high interest rate environment, such as Ghana has been experiencing, a reduction in interest rate is critical to drive investments in order to generate growth and to create essential jobs. Between 2016 and 2017, the Monetary Policy Rate, the 91 day Treasury bill rates and interbank rates saw significant reductions. While the MPR fell 450 basis points to 21 percent, the 91 day treasury  bill rate fell from 16.8 percent to 13.2 percent. Average lending rate, however, remains high even though it fell marginally from 31.38 percent to 28.96 percent. Meanwhile, with key challenges to credit such as limited information persisting, credit to the private sector grew by just 3.2 percent  (as at September) in 2017 as against 17.4 percent (as at September) in 2016.

According to the recent World Bank Doing Business index, credit bureau coverage in Ghana is only 16.5 percent of the adult population along a zero percent credit registry coverage. While the 2018 budget has indicated the launch of a national development bank and intentions to expand the capacity of the EXIM bank to support agriculture and industrialization, there is no mention of policies to address the limited credit information challenges faced by banks in the lending business, especially those lending to Small and Medium Enterprises. It is recommended that the government, in consultation and collaboration with the private sector, find reliable and sustainable means of generating and distributing credit information (both positive and negative). This will ensure increased and sustainable credit flows to the private sector and also attract investments into the banking space.

Job creation

Unemployment continues to be a major challenge in the country despite numerous promises and policies to create jobs for the youth. The government for instance in the 2017 budget projected about 750,000 jobs would be created under the Planting for Food and Jobs programme. The 2018 budget however provided no details on the number of jobs that have been created so far under this programme.

In the 2018 budget, several policies and programmes have been outlined to create new jobs for the youth in various sectors.  To deal with the increasing graduate employment challenge, the government has allocated GHs 600 million to employ 100,000 graduates as part of the Nation Builders Corps programme (NabCorp). Successful recruits will be trained and engaged in various sectors of the economy, ranging from health, education, revenue mobilisation etc.

This programme is a reflection of policy incoherence and a myopic approach to solving graduate unemployment challenge. The focus of the 2018 budget is to revamp agriculture for food sustainability and feeding the numerous factories to be established under the 1-district-1-factory policy.  Interestingly, the amount allocated to the Ministry of Agriculture, which is annually inadequate, was cut by 21 percent. The decrease is likely to affect productivity outcomes in the sector. However, the elephant in the room is the ageing cocoa and food crop farmers and the low interest of the youth to venture into agriculture. One would have thought a policy to engage graduates across the country would centre on finding innovative solutions to encourage graduates into agriculture.

A more prudent solution to graduate unemployment would be to invest the 600 million cedis allocated to the NabCorp into providing financing through a seed fund to encourage more graduates into the value chain of agriculture. The existing financing options for the youth interested in agriculture are unfavourable, expensive and limited. Existing programmes such as planting for food and jobs targets mainly existing farmers and does not make available direct access to funds for agro-based start-ups.  Other training programmes targeting the youth at the district levels do not come with grants. Seed funding for graduate agribusinesses will therefore be a better option to create immediate jobs across the country, which can be scaled up over time with financing from traditional financial institutions.

Also, creation of the establishment of NabCorp is an affront to the NEIP policy that aims at creating an entrepreneurial nation. The biggest challenge graduates face in starting businesses after their national services is access to “cheap funds” and business development to pilot their ideas or project research after school. However, only 50 million cedis has been allocated to NEIP as initial funding to support 500 youth businesses in 2018. The allocation to the nebulous NabCorp when channeled to NEIP to create a special venture capital for graduate startups/projects would create more sustainable jobs in the medium term.

Though the details of how the NabCorp programme will be operationalized has not been stated, it is difficult to differentiate between it and the compulsory one-year national service every graduate in the country has to undertake. The National Service programme already provides hands on training and apprenticeship to graduates and transitions them well into the world of work after school as they serve their nation in various sectors. What additional skills will the NabCorp offer graduates who have been trained for four years in specialized fields?

What graduates in Ghana need are sustainable jobs created by a thriving private sector, entrepreneurial training and seed capital to start their own business.

Agriculture

The 2018 budget demonstrates government effort to transform the economy via the agriculture sector. Numerous projects and programmes have been outlined aimed at addressing the persisting challenges in the sector; access to finance, low mechanisation,post harvest losses, low technology uptake, etc.For instance,about GHS 100 million has been allocated towards the implementation of the Ghana Incentive-Based Risk Sharing System for Agricultural Lending (GIRSAL), a Bank of Ghana initiative aimed at incentivising banks to give credit facility to the agriculture sector. There is also a decision to purchase various types of machinery, rehabilitate dams and support livestock and poultry farmers. The budgetary allocation to the Planting for Food and Jobs programme have been increased from a  GHS 560.5 million to GHS 700 million. These aforementioned programmes look good on paper and has the potential to boost the agriculture. The onus however lies on the government to effectively implement them

Tourism

The 2018 Budget highlights the government’s commitment to improve tourism infrastructure, as well as the promotion and marketing of tourism. The 2017’s budget reduction in capital expenditure by approximately 74 percent was concerning, because such resources were necessary to ensure the ongoing development of tourism infrastructure in tourist sites such as proper sanitation, signage, and good roads. While the government leaned towards working alongside PPPs to achieve this, public investment still plays an important component, if not greater role. The 2018 budget still maintains PPPs to facilitate the infrastructure drive, for example, in developing standards for new tourism enterprises. However, the increase in CAPEX, which marks an increase of about 1,577 percent from the 2017 budget (From GHS 1 million in 2017 to GHS 16.7 million in 2018), reflects the government’s realisation that increased spending in tourism has great potential to drive economic growth, and that its own investment and development in the sector is consequently, very important. Going forward, it recommended that government continually seek private partnerships to invest in good roads and other infrastructure that will attract the needed private sector investment. Government should also provide incentives to private businesses who will for instance, want to invest in the ecotourism and historical sites.

ENERGY

Energy Bond, Cash Waterfall Mechanism (CWM) and Electricity Tariff reductions

Proceeds from the Energy Sector Levy (ESL) increased from GHS 1.6 billion in 2016 to GHS 1.9 billion in 2017 (projected revenue by year end 2017) and is expected to reach GHS 2.1 billion in 2018. Efforts on the part of government to reduce the energy sector debt have been laudable considering that the debt has been reduced to GHS 5 billion from GHS 10 billion via payments made through the Energy Sector Levy (ESL) as well as via the proceeds of the energy bond (proceeds were however unspecified in the budget). However, the energy bond-cash waterfall mechanism-electricity tariff reduction combination of policy initiatives is an intricate one which needs to be carefully handled or else gains from debt reduction will be quickly eroded.

The Cash Waterfall Mechanism (CWM) which focuses on “allocating and paying collected revenues to all utility service providers and fuel providers”[1], prima facie, does not immediately deal with all the factors that led to the accumulation of debt including excess generation capacity, technical and commercial losses of the distribution utility, government non-payment of utility bills as well as inadequate diversified sources of fuel supply for growing thermal generation. As long as these factors exist, the CWM approach may not yield desired results and the likelihood of further debt accumulation remains.

Careful consideration must also be given to the impetus towards reduction in electricity tariffs in light of the above. Though government’s move to reduce electricity sector tariffs on the surface, looking at only short to medium term gains has the appeal of reducing the tariff burden of consumers, there is the potential of jeopardizing debt restructuring efforts through the ESLA and energy bonds. Insofar as the energy sector levy is built into the electricity tariffs, if tariff reductions will affect the Energy Debt Recovery Levy, the Public Lighting Levy and the National Electrification Scheme Levy, then the electricity tariff reduction strategy may potentially upset debt restructuring efforts. Further, the tariff reduction strategy must not circumvent automatic tariff adjustment which is a key pivot of the debt restructuring effort.

If the factors that led to debt accumulation are not dealt with thus further debt is accumulated, and enough revenue is not raised to support the operation of the CWM given the persistence of the debt accumulation factors as well as reduction in electricity tariffs, debt restructuring gains will be eroded and the government will be issuing bonds for a long time.

Ministry of Special Development and Initiatives

The allocation of GHS 423 million to the Ministry of Special Development Initiatives towards capital expenditure (capex) for the Infrastructure for Poverty Eradication Program (IPEP) from the Road, Rail and Other Critical Infrastructure Development priority area of the Annual Budget Funding Amount (ABFA) is a bit worrying; especially considering the fact that only GHS 150 million (a reduction from the 2017 budget allocation of GHS 177.8 million) was allocated to capex for rail infrastructure and GHS 200 million to capex for road infrastructure. Earlier caution had been given in our analysis of the 2017 budget concerning the vagueness of the “Other critical infrastructure” aspect of the priority area because it gives room for the thin spread of the ABFA. There is no comprehensive policy document that details the projects the IPEP would cover (even though some of government’s flagship projects have been listed) yet the programme has been allocated GHS 423 million. It will be useful for the government to clearly justify this allocation by presenting the details of the programme that warrants this allocation.

National LPG Cylinder Recirculation Policy

The government’s move to push forward with the LPG cylinder recirculation model is commendable. In rolling out the policy next year however, the government has to be mindful of the fact that gas explosions still remain largely a function of safety measures than location of gas filling stations. Therefore gains from the recirculation model risk being eroded if critical steps are not taken to strictly enforce safety measures at the bottling plants to be established.

Further, there is the need to harmonize the work of all relevant oversight bodies including the National Petroleum Authority, the Ministry of Planning (Town and Country Planning) and the Ghana Standards Authority and to ensure proper monitoring and supervision in the performance of their roles. This is to both ensure that safety measures are upheld and that communities do not develop around bottling plants. The business model for rolling out this policy must be robust to ensure sustainability of the policy overtime and also to rope in the existing 307 Bulk Road Vehicle operators and 647 gas filling stations. It is also necessary to reconsider and fast track the recapitalization of the Ghana Cylinder Manufacturing company which has been unduly delayed. This will ensure the security of supply of LPG cylinders as well as serve to reduce imports of cylinders. Finally, it is important to segregate the market into industrial, commercial and residential segments in order to adequately meet the needs of these segments while avoiding LPG shortage and the development of a black market.

Rooftop Solar for MDA’s

The move of government towards rooftop solar for MDA’s may be considered laudable. But if Energy Commission’s rooftop solar program is anything to go by, the government’s target of 2-3 percent increase in renewable energy generation will not be achieved. The target of the Energy Commission’s rooftop solar program when launched in 2016 was to achieve 200,000 installations within 1 year. As at the end of 2016, only 89 full installations had been completed across the country. This is chiefly because, while the solar panels are provided for free by the commission to citizens who sign onto the programme, the balance of systems (solar batteries, charge controllers, inverters etc.) to be purchased by the citizens to make up a full installation remain prohibitively expensive considering the power requirements of an average middle income household or a commercial enterprise. To make adoption of rooftop solar by MDAs viable the approach should be a bottom up one which will include reorienting the way energy is used within the public sector. For instance; most MDA offices use large power consuming appliances such as air conditioners, kettles, microwaves, fridges among others. It will be highly expensive if these appliances are to be powered using solar. There is a critical need to enforce strict energy efficiency rules at such premises.

[1] Budget Statement 2018

EDUCATION

Ghana’s education sector experienced a provisional growth of 9.1 percent and was the second highest performing sub sector in terms of growth in the service sector in 2017. Over the period, the number of the beneficiaries of the ‘destiny changing’ Free SHS policy were 353,053 first year students made up of 113,622 Day students and 239,431 Boarding students. Total enrolment at the basic level increased from 7,736,145 to 7,778,842 representing a 0.55 percent increase. 49,000 teacher trainees from 41 public Colleges of Education benefited from the restored teacher trainee allowance and 86 percent overall progress on the construction of the 23 new Senior High Schools was achieved.

In general, the total budget for the Ministry of Education, including the GETFUND, saw an increase of 11.6 percent in 2017, when the budget was GHS 9.12 billion, whilst in 2018 the designated spending was GHS 10.18 billion. The amount allocated to employee compensation also increased by 11.5 percent from GHS 6.5 billion in 2017 to GHS 7.2 billion in 2018. Goods and Services increased by 0.04 percent from GHS 1.35 billion in 2017 to GHS 1.36 billion in 2018. A critical look at the policies and programmes provides an indication of the government’s commitment to making education accessible and ensuring participation by all. A review of the capitation grant from GHS 9 to GHS 10 for 6.37 million pupils, an absorption of BECE registration fees for all public-school candidates and supply of textbooks are a few of the programmes. The capitation grant increase is welcomed, as 75 percent of households surveyed by NDPC said they paid some levies or fees at the basic level of education^[2] and it affected the access to education for their wards. Therefore, the plight for parents and school heads has been lessened given their calls for an increase in the capitation grant.

The proposed establishment of the Voluntary Education Fund to support education is a good initiative in the education sector. However, it raises more questions about the sustainable funding of education policies like Free SHS policy and Teacher Trainee Allowance. The budget allocated an amount of GHS 1.34 billion for the implementation of the Free SHS policy in 2018 through the Annual Budget Funding Amount (ABFA) and the Government of Ghana fund (GoG) and skewed towards Goods and Services. Implementation challenges of the free SHS, specifically with infrastructure and the poor revenue performance, have been revealed recently.  It has become imperative for the government to find innovative ways of funding the free SHS policy, especially the inadequate infrastructure, which is well documented. CAPEX allocation in the education budget is GHS 671 million, accounting for 6.6 percent of the total education allocation and mainly funded by Internally Generated Funds (IGFs) and Development Partner Funds (DP). This is not encouraging as Infrastructure is vital in the achievement of the quality education enshrined in the Sustainable Development Goal (4) and the African Union agenda 2063. The question which needs answering is what will be the setup of the voluntary education fund if established?

While the progress under education is commendable, according to the “Country Private Sector Diagnostic’’ study by the World Bank Group, the education sector provides a high growth potential of multiplier effect on the economy if the role of the private sector is encouraged. Granting of tax relief to privately-owned universities and, in the near future, for privately-owned SHS is encouraging and should be sustained to help build the human capital that the country need in light of the industrialisation drive being pursued.

HEALTH

From 2017 to 2018, the budget allocated to the Ministry of Health marginally increased from GHS 4.23 billion to GHS 4.42 billion. This translates to an 4.64 percent increment year-on-year. This increase reflects the government’s intentions over the next year to increase the number of health care professionals by 15,000, to increase the coverage of vaccines and antiretroviral drugs distributed throughout the country, and to continue construction of health infrastructure. From 2017 to 2018, all budget allocation sources and items, except those coming from Development Partner Funds, and allocations to Goods and Services by the Government of Ghana (GoG), rose. The aforementioned allocations decreased by 42.5 percent and 96.7 percent respectively. Although the budget included a provisional allocation of GHS 187 million for the provision of essential drugs as a priority programme, the effect of the decrease in the GoG allocation to Goods and Services by 96.7 percent is ambiguous given the government’s plans to increase the number of vaccinations and antiretroviral drugs in the next year.

Over the past year, the government paid half of the National Health Insurance Scheme’s total arrears of GHS 1.2 billion, owed to healthcare service providers. In the 2018 Budget Statement, the government also stated the intention to review the funding sources of the NHIS, presumably with the view of including more non-state alternative sources and ‘reviving’ the NHIS. In the past, the NHIS has been funded by the National Health Fund, which comes from a combination of SSNIT contributions and the National Health Insurance Levy (NHIL). The active membership of the scheme grows every year, increasing the burden on the NHIS. Meanwhile, the allocation to the fund minutely increased by 4.6 percent from the GHS 1.7 billion allocation in 2017 to the GHS 1.8 billion allocation in 2018. Given that multiple studies over the years have pointed to the unsustainable nature of the current financing structure of the NHIS and the fact that the current government have also acknowledged this, the question arises of how exactly the NHIS will be funded in the future to ensure that it continues to fulfil its mandate.

In the spirit of contributing new ideas to reform the NHIS, IMANI recommends the following as captured in our earlier publication in the year:

1. Providing an enabling environment to leverage the presence of private health insurance companies, which would foster more competition and drive down prices;
2. Making it mandatory for companies to provide private health insurance for their employees, which would take part of the burden off the NHIS;
3. The State covering the health insurance of only the most vulnerable in society.

Additionally, the 2018 Budget stated that the government would be exploring the possibility of financially weaning off some agencies under the Ministry of Health. The recognition and the efforts being made by government to explore complementary means to state funding for social basket programmes is commendable. This is especially justified given some past instances of alleged misappropriation of funds by board members within some health agencies and hospitals.^[3]

INFRASTRUCTURE
Investment into infrastructure sectors of the economy such as railway, roads, information technology, sanitation, water and housing does not only boost the economy by improving the efficiency but also creates several jobs which is the key target of the 2018 budget.

The World Bank in a recent report estimated that to address Ghana’s huge infrastructure deficit, a sustained spending of at least $1.5bn per annum over the next decade is needed to plug the infrastructure gap that exists[i].

It is therefore surprising to note that the allocation to public infrastructure declined in the 2018 budget. The total allocation to infrastructure sector in 2018 is GHS 1.804 million, a 31 percent reduction from the 2017 amount of GHS 2.624 million. This brings into question the priority the government is giving to the sector. The reduction in allocation will affect the routine maintenance and upgrade works on roads, bridges, rail stocks, housing and dams in the country. The hardest hit subsector is transport, which had an 83 percent budget cut in relation to the 2017 allocation. However, the aviation sector had a 230 percent increase in allocation compared to the 2017 budget.

The table below illustrates the comparison between the 2017 and 2018 budget allocations to the sectors under infrastructure.

Source: 2018 Budget.

Public-private partnerships bill blues

Public-private partnerships (PPPs) have been identified as one of the alternate options to raise the investments required in bridging the country’s infrastructure deficit. Several PPPs are being considered for various infrastructure projects stated in the budget especially in the railway sector. However, the lack of a PPP legal framework to facilitate private investment is major drawback. A PPP framework provides a clear legal framework for developing, procuring, reviewing PPP projects. It also promotes local content in PPP projects, value for money and accountability. Given how important this piece of legislation is, why has it not received the same level of urgency as the special prosecutors bill and others, which were passed into law in the last 10 months? The bill was drafted under the erstwhile administration.  With the emphasis the 2018 budget places on job creation, government must make the passage of the PPP bill into law a priority in the first quarter of 2018 to create more jobs and promote efficiency.

Getting the trains back on track.

Investment in railway infrastructure will not only create more jobs but also improve the movement of goods and people across the country. Plans to construct city railways will greatly ease the stress & traffic burden of commuters in Accra and Kumasi.  Other railway development plans highlighted in the 2018 budget; Western Railway Line (Takoradi- Kumasi), Eastern Railway Line (Accra-Kumasi), Central Railway (Kumasi – Paga) will greatly boost economic activities and ease doing business in the country and with our neighbouring countries.

The sector was allocated GHS 544 million in the 2018 budget, representing a 5 percent increase to the 2017 allocated amount. The major challenge with these ambitious infrastructure plans is attracting private capital to complete them. The ministry of railways development was carved from transport with the intention to focus more attention on revamping the sector to contribute to economic growth.  However, the restructuring of the railway sector has not be expedited. The proposal to separate the Ghana railways development authority into two institutions: one as a regulator and the other managing the infrastructure by reviewing the Railway Act, 2008 (Act 779) has not be done. The most efficient model that will ensure sustained investment into rail infrastructure is when the management of the infrastructure is separated from the operation, with government focused on regulating the sector and not a player.

^[1] Grant to other government units include items such as the National Health Fund, the Education Trust Fund, and the Student Loan Trust Fund.

^[2] NDPC (2016), 2014 Citizen Assessment of the Capitation Grant, Accra Ghana.

^[3] Kwawukume, V., (2014); Graphic Online; Audit Report Orders 3 Top Ex-Korle-Bu Officials to Refund GH¢966,000; Available at: https://www.graphic.com.gh/news/general-news/audit-report-orders-ex-korle-bu-officials-to-refund-gh-966-000.html

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Source: Imani Africa

The post IMANI’s preliminary assessment of key sectors in 2018 budget appeared first on Citi 97.3 FM - Relevant Radio. Always.

[contextly_sidebar id=”OeH8Cs4lKwxTmI1RXRHYX5vvPmlmLO8U”]He argues that government will also be compelled to resort to cutting down on some critical expenditure to make up for the shortfall.

“It appears that the Minister seems to have shifted the debate to the middle because he is the one who is going to face reality… how do you finance free SHS, how do you finance the one million US dollars for the constituencies?” Seth Terkper quizzed.

He added, “We are told that some monies will be taken from the District Assemblies; the very ones that are going to be losing their revenue base. So they are very hard choices and it’s up to the Minister of Finance in consultation with the President and cabinet to show reality.”

Finance Minister, Ken Ofori Atta during the budget presentation on Thursday, announced that about eight taxes that will be abolished whilst four others will be reviewed.

The taxes to be abolished include the 1 percent special import levy, and the 17.5% VAT on financial services and domestic air tickets.

The move has been met with excitement from the beneficiary sectors. But Seth Terkper told Citi Business News government may suffer severe challenges considering some risks that confront the economy.

Some of the factors that the former finance minister alluded to include; falling crude oil prices, low revenue mobilization, among others.

“We are in the race with Kenya and others by African standards, and the NPP government can up its game. But some of these are regional so it means that the economy even if it doesn’t make 7%, it’s going to double around 6% from the 3% margin it is currently. With luck, the coming on-board of the TEN Fields, and the possibility of fixing the FPSO Kwame Nkrumah and commencement by Sankofa towards the end of the year should rake in forex and exports will shoot up.”

Other taxes that are up to be abolished are; 17.5% VAT/NHIL on selected imported medicines that are not produced locally, 17.5% VAT/NHIL on domestic airline tickets, 5% VAT on real estate cost, and  Duty on imported spare parts.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana

The post Gov’t may reduce expenditure over tax cuts – Terkper appeared first on Citi 97.3 FM - Relevant Radio. Always.

The budget will give details of government’s expenditure and revenue generation plan for the year 2017.

[contextly_sidebar id=”93tBUEgDqAADiEMTDgIe0X4y8pVzOtue”]There is heavy interest in today’s statement from stakeholders in all sectors of the economy, due to the number of promises made by the NPP led by its Flag bearer and now President of Ghana, Nana Addo Danquah Akuffo-Addo, and his running mate, an economist by profession Dr Mahamadu Bawumia, prior to winning the elections.

Ghana’s economic challenges

Ghana for close to six years now, has been wobbling in a number economic challenges which have seen a decline in its economic growth, a plunge in Government’s revenue, rising unemployment, and increasing agitation among business operators over high taxes, a depreciating currency and weak economic fundamentals.

In his first state of the nation address, President Nana Akuffo Addo painted a gloomy picture of the economy, reiterating among others earlier reports by the Finance Minister, that the country’s current debt stock had ballooned to GH¢122 billion, leaving Ghana’s debt stock at 74% of GDP.

He added that, three key targets set under the IMF program – growth, fiscal deficit were missed.

What budget will focus on

It is expected that, the Finance Minister will lay out key reforms Government will be rolling out to deal with the country’s current challenges including high debt levels, declining growth levels, increasing budget and fiscal deficits, unemployment, private sector challenges and corruption among others.

A statement  from the Finance Ministry said the 2017 Budget is expected to focus on stimulating growth and job creation, through private sector development.

The budget will also be heavy on key reforms and policies aimed at restoring fiscal discipline and tackling corruption and revenue leakages in the public sector.

”The Budget will include measures to restore fiscal discipline and good economic governance, transparent and accountable use of public resources in accordance with the new Public Financial management law and to provide a credible basis for economic policy clarity going forward” a statement from the Finance Ministry said.

Key sectors that the budget will focus on include the power industry, education, health, agriculture , infrastructure and the private sector.

Tax cuts

It is also expected that Government will also reveal a tall list of initiatives and strategies aimed at propelling the growth of the private sector, as part of that a number of tax cuts aimed at cementing its moves to propel the growth of the private sector will be announced.

It is unclear which taxes will be removed, but the Special Import Levy, the 17.5% VAT on imported medicines not produced in the country as well as the 17.5% VAT on Financial Services, 17.5% VAT on domestic airline tickets  as well as the 5% VAT on Real Estate sales make up the list of taxes likely to be abolished.

Import duties on raw materials and machinery for production within the context of the ECOWAS Common External Tariff (CET) Protocol, reduction of corporate tax rate from 25% to 20%,  review of VAT for micro and small enterprises from the current 17.5% to the 3% Flat Rate VAT, are among others on the list.

Also one of the two energy sector levies may be scrapped.

Spending cuts

Meanwhile Citi Business News has gathered that there will be a heavy slash in spending in some sectors of the economy.

It unclear which areas will affected the most. Government had earlier announced a 7 billion cedi unplanned spending incurred by the previous government.

However areas such as infrastructure, health and education are expected to experience some high level of spending. Government is also expected to announce and bring to finality how it intends to pay for its free SHS policy.

Economists on budget

Economist, Dr. Adu Owusu Sarkodie, has made a strong case for a revision of all statutory funds captured in the budget. He argues that the funds have been constrained as government has not been consistent with its allocations in addition to their inefficient management.

Currently, the District Assembly Common Fund (DACF), accounts for 7.5 percent of all domestic revenue.But Dr. Sarkodie told Citi Business News the continuous contribution of the earmarked funds to the negative fiscal spaces make a revision inevitable.

“I want to see a drastic review; either reduction of the rates or complete abolishment of all or some of the ten earmarked funds. This is because only three components caused the negative fiscal space…Wages and salaries, interest payments and earmarked funds in 2013 accounted for 9.6 percent more than total revenue and grants. The figure recorded 6.9 percent in 2014 and 6.2 percent in 2015,” he argued.

Another Economist, Daniel Amarteye Anim, has urged the government to be tough in monitoring the utilization of revenue. He contends that the lack of proper reconciliation with expenditure has partly contributed to budget overruns.

The CEO of the ICEG, also advocated a decentralized system to guide the control of public expenditure.

“We need to watch the efficient utilization of resources. How do we ensure that the little money that is accrued is used in a manner that ensures value for money or how money allocated is used judiciously even at the district assembly levels. We need to decentralise our systems and that would be a better way to address some of these imbalances in expenditure,” he stated.

Expectations of business associations

Ahead of the presentation, industry players and business associations have reiterated calls for the solutions to their numerous needs to be captured in the budget.

In an interview with Citi Business News, the President of the Association of Ghana Industries (AGI), James Asare Adjei, said he anticipates among others a reduction in the numerous tax charges currently levied on businesses.

“There are a number of taxes that AGI considers as nuisance and there are others too that we think that when they are done away with it will boost the production capacity of our businesses…if you remove the 5% import duty on raw materials we will definitely be competitive as industries and for that matter, it will be able to promote exports,” he observed.

“The whole issue goes beyond how much revenue you are looking for, but then what extent do you expand the tax net such that more people will be roped in because you have a tax friendly environment if those taxes which have outlived their usefulness are also removed” he argued.

Labour unions are also highly confident of policies to favour the provision of jobs.

The labour unions contend that, employers should be able to absorb more labour if they are cushioned with lower cost of production.

The General Secretary of the Industrial and Commercial Workers’ Union (ICU), Solomon Kotei, told Citi Business News that government would also need to settle all outstanding issues with pensions and welfare of labour.

“Our core thing is that, we are looking for a budget that will bring hope for job opportunities because unemployment has been a serious challenge to this country and we will see how job openings will rear its head in the current budget. We will also look forward to see a budget that will address the issues that people who are on pension are even currently facing. As I talk to you, people on pension have not received their salaries from January, February and now we are in March” Solomon Kotei lamented.

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By:  Vivian Kai Lokko/citibusinessnews.com/Ghana

The post Finance Minister presents budget statement today appeared first on Citi 97.3 FM - Relevant Radio. Always.