Friday, 17 November 2017

2018 budget figures misleading and inaccurate – opposition financial experts


Adnan Adams Mohammed

Image result for isaac adongo

Financial expert and member of parliament, Isaac Adongo has slammed the government for deliberately declaring September instead of December as the end of the fiscal year to calculate the country’s GDP as a wrong move while adding that Ghana’s GDP to debt is 78% and not 68.3% as revealed in the budget statement for the year 2018.

“You are comparing September to December. December is the actual GDP realized at the end of the year.

He continued, “So if you want to compare, compare December to December and I can assure you that when you add October, November, and December, Ghana’s debt GDP is around 78%. So he came consciously to deceive us by not telling us the true state. You cannot be comparing mid-year figures with end-of-year figures.”

The Bolgatanga Central MP, accused Finance Minister, Ken Ofori-Atta and the Akufo-Addo administration of deliberately concealing the real debt profile of the country.

Reading government’s 2018 budget and economic policy last week, November 15, 2017, Ken Ofori Atta, who stressed on government’s commitment to solidify gains for as long as they remain managers of the economy, boasted of a return to robust growth, with a real GDP growth of 7.8 percent in the first half of 2017, against 2.7 percent in 2016 as one of the achievements under Akufo-Addo’s administration.

In his reaction to the budget presented, the MP dared government to tell the truth about the current state of the country’s economy claiming the statement was a scam. He questioned why the government disclosed the state of the economy as at June and not now.

“If this is not scam, why are you not telling us the true state of the economy now but you are telling us that of June?”

Dr John Gatsi, an economist and lecturer at UCC  has also stated that, the entire report captured in figure 4 in the 2018 budget which gives pictorial view debt accumulation is misleading and does not correctly analyze the debt accumulation rate.

He explained that, “On page 30  paragraph 114 of the 2018 budget, debt accumulation rate increased from 47.45% in 2013 and peaked at 49.90% in 2014 but reduced significantly to 25.97% in 2015 and further reduced to 21.98% in 2016.

“This implies debt accumulation rate between 2014 and 2015 decelerated by 23.93% and between 2015 and 2016 it decelerated by 3.99% meaning debt accumulation rate has been decreasing significantly since 2014.

“It also means per figure 4 on page 30 , the total debt at the end of September 2017 should be GHC138.9 billion implying that in the 10 months  up to September, 2017 the government borrowed GHC17 billion and with borrowing in October, November and December 2017 including the Energy bond the borrowing maybe more than GHC24 billion in 2017 alone”, he noted. However it should be noted that the energy bond proceeds are not classified as part of Ghana’s state debt.

He further clarified stating that, “Therefore comparing the average debt accumulation rate from 2013 to 2016 with 10 months in 2017 is misleading especially when the 2016 debt accumulation rate was 14.02%, much lower than the average debt accumulation rate of 36%.

“Note again that the 14.02% is approximately the same as the 13.58% debt accumulation rate for the 10 months in 2017.”

Also, the former Deputy Finance Minister Cassiel Ato Forson has taken a swipe at the 2018 budget.

The minority spokesperson on Finance who described the budget as an empty promise, asserted that figures mentioned by the Finance Minister do not correspond with the reality on the ground.

“If you look at the budget carefully you will see it’s empty. The promises are empty and are not supported by the numbers on the fiscal table. Ghanaians will end the year 2018 without seeing anything tangible.”

Cassiel Ato Forson also questioned the Minister’s decision to extend the National Fiscal Stabilization and Special Import levy that was enacted in 2013 as temporary tax to avert the economic woes at the time.

“The Minister of Finance said they have turned around the economy, granted that they have turned around the economy, why then are they extending the National Fiscal Stabilization and Special Import levy, the temporary taxes that were enacted in 2013 to deal with the problems the economy was facing at the time?”

Mr. Forson added that the debt-to-GDP ratio is approximately 73.6 per cent but when the Energy Bond and the UT/Capital banks closure cost is added, the debt-to-GDP ratio will shoot up to 76.8 per cent.

He said the boasting by the government to achieve 5.9 per cent GDP growth in 2017 and 8.9 per cent in 2018 could be misleading.

That, he said, was because the projected non-oil GDP growth of four per cent in 2017 was lower than the realised non-oil GDP growth of 4.8 per cent in 2016, while the projected non-oil GDP growth of 5 per cent in 2018 was only 0.2 per cent higher than the realised non-oil GDP growth in 2016.