[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.

In a scathing assessment of the economy left by former National Democratic Congress (NDC) government, he said Ghana currently lay in conditions ripe for a debt crisis to emerge.

[contextly_sidebar id=”STvSGwh3ZvuyhP2PJkAODANGlQnRQbu7″]Dr. Amoako-Tuffour in a letter penned to the nominated Finance Minister, Ken Ofori-Atta, under the newly elected New Patriotic Party (NPP) government, described the economy left to the new government as “slow moving, indebted and jobless”.

This is despite Mr. Terkper consistently reiterating that, his government left behind a stabilized economy for the current administration.

Ghana’s debt stock lies at GHc 110 billion, as at August 2016, having risen to as high as GHc 112.4 billion under the previous government. The country’s debt to GDP ratio also stands at about 71 percent, according to Mr. Terkper.

About GHc61 billion of the debt comes from external borrowing, whiles GHc49.2 billion is from domestic borrowing.

In defence of the debt accrued by his government, the immediate past Finance Minster has argued that all nations borrow for major capital or infrastructural development, hence the previous government’s focus on “smart-borrowing” to sustain growth and development so as to avoid unduly increasing public debt.

Ability to borrow not good management

Dr. Amoako-Tuffour, however believes this “smart borrowing” may have left the Ghanaian economy on the brink instead of providing the needed stability for the economy.

“I must admit that while Ghana has not yet faced a debt crisis of the likes of the PIGS of recent vintage (Portugal, Italy, Greece and Spain), Ghana has built up all the conditions and vulnerabilities for a crisis to emerge.”

He noted further that, the the remedy for the economy “lies not in high spirits accounting, “smart borrowing” nor in Ponzi games, but in sound management and policy prudence for a higher public purpose. The ability to borrow should never be mistaken as a sign of good management.”

Dr. Amoako-Tuffour thus suggested that, the sound management of the economy could be achieved by accelerating economic growth, increasing revenue mobilization and prudent spending.

He elaborates on these points in the letter which can be viewed here.

Dr. Amoako-Tuffour explained in his letter that, substantial growth in national output “no doubt, will reduce the debt burden and provide additional resources through tax revenues; better if that growth creates jobs.”

He also noted that, the predicted economic growth for Ghana would likely not exceed 5-7 percent, thus attention must be paid to prudent spending and revenue management.

“The bulk of the needed adjustments rests on revenue and spending management; not just for the sake of better public sector management, but to provide the enabling environment for private enterprise growth,” the economist stated.

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By: Delali Adogla-Bessa/citifmonline.com/Ghana

The post Amoako-Tuffour slams Terkper’s ‘smart borrowing’ approach appeared first on Citi 97.3 FM - Relevant Radio. Always.

Speaking on the Citi Breakfast Show, Mr. Terkper said the coming on board of the TEN oil field and some other gas generation projects will gradually wean the country off the West African Gas Pipeline.

[contextly_sidebar id=”nyt4f5yITuk6OPoVKjlG8xtcMV30fKZ8″]President John Mahama spoke highly of Ghana’s prospects in his final State of the Nation address, as he said Ghana was closer to energy sufficiency following a tenure that was marred by the power crisis, popularly referred to as dumsor, which was brought on by a deficit in power generation.

Moving forward, Mr. Tekper said the country is going to “have TEN field gas starting this quarter” adding that “the nexus of gas supply is going to come from Sankofa which will put Ghana on the trajectory of about GHc 3 trillion worth of Gas, and this is the context in which we must look at the permanent solution.”

“We have secured the World Bank partial loan guarantee so the structure we have is that, Ghana will produce its own Gas,” the Finance Minister added.

Possible expansion of existing plants

The expansion of existing plants is also under consideration, to further consolidate the gains made towards energy self-sufficiency, Mr. Terkper said.

“The plants like Atuabo can be expanded. Independent power producers like Asogli has already expanded. We have three independent power production plants approved by parliament already, and all these are going to operate the Sankofa Gas which will be produced by GNPC.”

“GNPC will then sell this gas to either the VRA or independent power producers or others, and those plants will produce gas for Ghana. We are moving from depending almost exclusively on the West African Gas to using our own gas,” Mr. Terkper explained further.

He also noted that the third FPSO earmarked for the offshore Cape Three Point Sankofa development is at least 80 percent complete.

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By: Delali Adogla-Bessa/citifmonline.com/Ghana

The post We’ll have enough gas to end ‘dumsor’ – Terkper appeared first on Citi 97.3 FM - Relevant Radio. Always.

This comes days after the acting Power Minister, Seth Terkper admitted on the Citi Breakfast Show that government is presently negotiating with the Chinese and plans to use the country’s gas as guarantee.

[contextly_sidebar id=”OLM03qUDeW3wFkEOEaEdRRjlpychyPH2″]Deputy Minister of Energy, John Jinapor earlier denied the existence of such plans after the NPP made the claims.

The opposition party last week said the agreement which could see the country offer one of Ghana’s gas fields to China for a period of 19 years starting in 2018 has bleak implications for the future of Ghana

They also said Ghana may experience power crisis in 2017 if the governing National Democratic Congress is retained in power.

But the Ministry of Petroleum in a statement signed by its Head of Communications, Edward Bawa, said the NPP is peddling untruths.

“There is no basis for the assertion that Ghana’s gas would be exported for $2 billion. All of Ghana’s gas are being used and would continue to be used in Ghana for power generation. We should not confuse the use of proceeds or revenues from the sale of gas or its derivatives to support financing arrangements with the actual sale of lean natural gas and liquids. It is ridiculous to say that Ghana’s gas would be sold to China.”

The statement explained that the CDB facility simply anticipates the use of revenues from the sale in Ghana to power plants of lean natural gas to support financing.

“No natural gas would be sold to Chinese to facilitate the financing. Any excess lean gas which is not sold to power plants in Ghana would be dedicated to petrochemical industry development including fertilizer production to support Agriculture in Ghana. Any excess LPG or other natural gas liquids not used in Ghana can also be exported either to our neighbours or to any potential buyer.”

Jubilee field shut down normal

On claims that in 2017 gas supply from the Jubilee fieds will stop as the FSPO is expected to shut down for a period of six months the Ministry said the country has extra gas supply plants in place.

“In Ghana, gas supply is routed to our power plants through the gas plant in Atuabo. Gas Supply shutdowns are part of normal maintenance regimes on fields. Thanks to the hard work of the NDC Government, under the able leadership of President John Mahama, gas supply in 2017 will no more be from one field but from both the Jubilee and the TEN Field. Therefore, any shutdowns on one field would be substituted by Gas supply from the other field. Due to diligent planning, any shutdowns for maintenance on the Jubilee field would be more than compensated for by supply of gas from the TEN Field,” the statement added.

The Ministry further entreated Ghanaians to disregard the reports as they do not represent the facts.

“We once again assure Ghanaians that our offices are opened to all persons who genuinely seek information on the happenings in the sector.”

NPP may be ‘hallucinating’; Ghana has excess power

The Deputy Minister of Power, John Jinapor said the NPP was “hallucinating” and the claims had no basis.

“It’s simply hallucination; there is absolutely no basis for that,” he said on Eyewitness News.

We’ll mortgage Ghana’s gas to China but…

But Seth Terkper, the Minister of Finance who doubles as the acting Minister of Power confirmed the NPP’s claims but downplayed assertions that the deal has bleak implications for Ghana explaining that the gas being offered will be drawn from only one of Ghana’s three gas fields.

He indicated that it was “gas going to the Atuabo plant only under the GNPC. That is the only one we are talking about.”

Mr. Terkper also explained that this agreement was in line with government’s self-financing loan strategy following the negotiations with the CNB by a task force mandated to discuss the utilization of the $500 million remaining $1.5 billion of the $3 billion deal.

“The premise for the CDB facility, which is in tune with our self-financing loan strategy is that proceeds from any commercial project must be used to pay for any loans that are used to finance the project,” he said

“The payment was to be from revenue flows from crude oil which is sold on the international market at bench mark prices but crude oil prices fell and that source of financing the loan became inadequate,” Mr. Terkper noted in unison with the NPP’s narration.

He also explained that the strategy of self-financing loans was to avoid putting any burden tax payers.

“So we had indicated that once the processes start, there could be other source of financing repayment for the facility. That is the discussion that we are holding now, to see how we can use the proceeds from lean gas and from other gas sources to finance any infrastructure that is built and not put the load for such infrastructure on the tax payer and increase public debt.”

Click here for the Power Ministry’s full statement

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By: Godwin A. Allotey/citifmonline.com/Ghana
Follow @AlloteyGodwin

The post NPP peddling untruths; Ghana won’t sell gas to China – Petroleum Ministry appeared first on Citi 97.3 FM - Relevant Radio. Always.

In recent times, government’s decision to borrow from the international market has been heavily criticized as piling up the debt stock of the country, affecting interest rates.

But speaking to Citi Business News, the Finance Minister, Seth Terkper stated that government is targeting Ghanaians in the diaspora to raise money from them since it may be cheaper.

According to him, such bonds have been successful when a particular group of people from a country living abroad are targeted to invest in Diaspora Bonds.

“The Diaspora Bond is your residents  who are in the diaspora or who are outside and  have resources. Somebody living in the US and earning dollars.  So you are borrowing in dollars when you go do stocks, when you go borrow from banks. You can look at this group and target them and give them an instrument , just like a bond, just as we have the sovereign bond or the corporate bond,” he said.

He was of the opinion that Ghana will succeed in a diaspora bond since interest payment on savings in US and Europe is minimal and insignificant.

“We know for example that at the moment if you have an account in the US or Europe the interest rates there is close to zero, we are offering about 5 percent or even 8 percent,” he disclosed.

He stated that all the financial team requires is to embark on a sensitisation workshop to identify Ghanaians and West Africans living abroad who may be interested in the bond.

“You do the same education you do for the other bonds and you tell them we can offer you a better interest. If you have a credible source of repayment or you back it with your oil revenue as a source of repayment towards a particular project it could be successful,” he stressed.

He maintained that Diaspora bonds are mostly hinged on assurance of repayment which the government of Ghana has done well due to the establishment of the Sinking Fund.

“That Ghanaian who is outside or West African outside, if you open it up a bit and make them trust that you have credible source for repayment just as the Sinking Fund  they would give you that money,” he said.

By: Lawrence Segbefia/citibusinessnews.com/Ghana

The post Terkper chases Ghanaians abroad for ‘Diaspora Bond’ appeared first on Citi 97.3 FM - Relevant Radio. Always.