Chairman of the Finance Committee of Parliament Mr Kwaku Kwarteng has cautioned that Ghana will hit ground zero if the 2022 Budget Statement and Economic Policy of Government is not approved.
According to him, the consequences will not be palatable for the citizenry as government will not be able to run the economy and even pay salaries of workers.
“If we don’t approve the budget and by the 1st of January, 2022, there is no approved Appropriation, Public Sector workers cannot be paid, Government cannot honour its international obligations and we will throw this country into chaos. Let those saying we should reject the budget repent from what they are thinking about”, he warned
Mr Kwarteng gave the warning following threats from the opposition National Democratic Congress (NDC) that the Minority caucus will reject the budget statement, which was recently presented to Parliament by Minister for Finance Ken Ofori-Atta.
He said the choice of debating the motion for the approval of the 2022 Budget Statement or otherwise will the foundation upon which Parliament will consider the individual request for revenue mobilization measures and resource allocations that government is seeking.
Negative implications
A rejection of the 2022 Budget, he noted, will come with negative implications which will affect everybody in the country.
He said for instance that there will be chaos in the country since there will be no money to spend on government contracts and no money to pay government workers.
Furthermore, government will not be able to honour its international obligations.
Seconding the motion for the approval of the budget yesterday, Mr Kwarteng put up a spirited argument for total support in approving the economic policy of government.
Mr. Kwarteng, who is a former deputy Minister of Finance, said Ghana has suffered a lot because of the huge gap between its revenue mobilization and expenditures, stressing that now was the time to bridge that gap as the 2022 Budget “is seeking to do exactly that”.
Revenue mobilisation
According to the Obuasi West NPP lawmaker, since 2006, the gap between the country’s revenue mobilization and expenditures continue to widen, a development, attributing it to lack of bold initiatives by successive governments to address the challenge.
For instance, he said in 2006, for every GH¢100.00 collected for both tax and non-tax revenue, GH¢15.00 is used to pay interest on the loans the country has contracted.
In 2007, the amount used in paying interest on the loans contracted by the country went up by, with the country recording GH¢12.00 for the payment of interest out of every GH¢100.00 revenue collected.
In 2008, the story was not different as out of every GH¢100.00 revenue collected, GH1¢4.00 is used to service interest on the loans contracted.
Mr Kwarteng said in 2012 getting to the close of the President Mills administration, out of every GH¢100.00 revenue mobilized, GH¢16.00 was used to pay interest on the loans the country had borrowed.
“By 2016, when the Mahama administration was leaving office, for every GH¢100.00 collected as revenue, we were now using GH¢33.00 to finance our interest. I am painting this picture to let us understand the problem this budget is seeking to deal with and to urge you all to approve it”, he noted.
He said as a result of the COVID-19 pandemic which virtually shut down the global economy with Ghana not being left out, all the revenue projections the country made could not be materialized.
Government, he noted, had to borrow again to meet expenditure.
As a result of this, in 2020, for every GH¢100.00 revenue collected, GH¢45.00 was used to service interest on the loans the country had borrowed.
Mr Kwarteng said although the year has not ended, indications are that Ghana is likely to spend GH¢47.00 as payment of interest on every GH¢100.00 revenue collected.
The trend he noted, cannot be allowed to continue since it is not sustainable.
No meat down the bone again
With the economy facing the chronic difficulty of not being able to bridge the gap between revenue and expenditure, Mr. Kwarteng referenced a statement former President Mahama in 2013 when he went to Parliament and told Members that “the meat was now down to the bone”, a statement he noted, will be the opposite when the 2022 Budget was approved.
The Budget, he added, has outlined some measures to deal with the rising expenditure rate against revenues mobilized.
For example, he said Government has in the budget, initiated a measure which seeks to move the country away from sole sourcing to more competitive tendering contracts as well as improving efficiency of public sector project financing by tackling the value for money regime of government projects in accordance with the law.
“This is an expenditure control intervention that we support”, he added.
That notwithstanding, the Chairman of the Finance Committee of Parliament said Government again was seeking to apply GIFMIX to cut down unauthorized commitments as well as cut back on tax exemptions in order to mobilize more revenue to meet its expenditure.
Accordingly, he urged Parliament as a House to also lead by example and move away from sole sourcing contracts it has been awarding over the years.
“I wish the leadership of Parliament can cut cost as Ghana seeks to bridge the gap between our revenues and expenditures. Parliament should not just oversight the Executive, we must lead by example”.
