"Growth and Stability" The 2010 Budget

Dr. Kwabena Duffuor, Minister of Finance and Economic Planning presented to Parliament on Wednesday the Budget Statement and Economic Policy for Fiscal Year 2010.

The New Patriotic Party has described it as an "Enko Yie". According to the Minister, the 2010 Budget ushers in the government's growth and strategy framework towards a "Better Ghana" under a framework of "Growth and Stability", but the NPP has said, "It is getting increasingly clear that this government lacks ideas."

In a statement released immediately after the Finance Minister's presentation to parliament, the NPP said, in spite of the impressive legacy from the previous administration, the NDC government, after managing the economy for ten months, has reported disappointing results.

The Mills Administration, the NPP statement said, needs to cut back on huge expenditures on the multitude of committees and commissions, and sit up. "It is government's inability to deliver on its promises and do something about the worsening cost of living that has reduced its officials to people who take advantage of every public appearance to complain about the economy they inherited," the statement said.

Ghanaians, the NPP said, want a better life, and the earlier this government sits up and delivers, the better it would be for the country.

Even before the statement from the NPP had been released, the parliamentary caucus of the party had labeled the Budget statement "Sakawa 2,Eeko nyaa." They started singing "Yen ka kyere mo se omu beku yen", meaning "Didn't we tell you they will kill us?" The NPP's parliamentary caucus song was quickly countered by a song from the NDC parliamentary caucus: "Abe mu ewie, abe mu awie, o nyame bohye no, aba mu awie", meaning, "What God prophesized has been fulfilled."

The Finance Minister used almost 15minutes of his about two hour presentation to peck at the previous government by referring to an inherited unprecedented fiscal deficit which necessitated the NDC government to refocus and stabilize the economy. He said government has been strangled by huge arrears mostly from contracts which were awarded by the NPP Administration in breach of the procurement law.

Sounding quite dramatic, Dr. Duffuor said he feared more debts would be uncovered, especially at the Ministries, Department and Agencies, citing some GH¢10.1 billion owed by the Accra Metropolitan Assembly and others in the District Assemblies. The Budget was as usual, presented in a raucous, often good natured atmosphere. The Mail presents below highlights of the Minister's statement:

OPENING SALVOS

Madam Speaker,

I beg to move that this August House approves the Budget Statement and Economic Policy of the Government for the year ending 31stDecember 2010. It is my duty once again, to present to this Honourable House and to the people of Ghana the 2010 Budget Statement and Economic Policy on behalf of His Excellency, President John Evans Atta Mills.

With your permission, I would like to present to the House this morning, an abridged version of the full Budget Statement. The Hansard Department is, therefore, kindly requested to capture the entire Budget Statement and Economic Policy tabled and circulated for your information and action.

His Excellency the President has set out his government's vision of creating a "Better Ghana" through a transformed and prosperous nation providing opportunities for a better life for all Ghanaians. It is this vision and the broad policy framework which defines his economic, social and political philosophy.

On 5th March this year, I presented to this House the first Budget Statement of the Atta Mills Presidency. The Government was barely two months old and had just begun the process of assessing the true state of the economy we had inherited.

In August, I appeared before this House to present a supplementary budget. The supplementary budget was drawn up against the backdrop of indications based on empirical evidence that indeed showed that all was not well with the economy we inherited on 7th January, 2009.

Rather than engage in rhetoric on the state of affairs, we embarked on well thought out policies and actions designed to address the downward trend. In the course of my presentation, I will highlight some of the critical challenges we have faced.

By way of a quick summary, the truth that must be told is that, the Government inherited a distressed economy characterised by huge twin deficits. The fiscal deficit alone stood at GH¢2.6 billion at the end of 2008 when the NPP left office compared with GH¢260 million registered at end 2000 when NDC left office.

In addition, by end September, arrears and unpaid bills amounted to GH¢1.7 billion in 2008, amounting to almost 22% of GDP. Never in the history of our country have we faced such a huge fiscal deficit in proportion to GDP.

Having regard to the significant increases in Government resources between 2005 and

2008, the huge deficit showed a serious failure of expenditure control. We were living beyond our means in a manner that we could not sustain.

The accumulation of the huge arrears in 2008 threatened the execution of the 2009 budget since most of the arrears were not detected and budgeted for during the preparation of the 2009 budget. Significantly, a large proportion of these arrears arose from contracts that were in clear breach of the procurement law.

The NDC Government has managed to pay a sizeable proportion of the arrears but there are still outstanding ones to be taken care of in the 2010 budget.

There is also the possibility of uncovering new arrears which MDAs have not disclosed to Government and these will have to be dealt with as and when they are uncovered. For instance, we have just uncovered a number of outstanding commitments some of which are:-

• Accra Metropolitan - GH¢10,061,027.00

• Kwahu West Municipality - GH¢1,250,869.00

• Atwima Mponua - GH¢1,327,848.00

• Kumasi Metropolitan - GH¢6,761,166.00

One of the burdens that this government has had to carry is huge judgment debts.

How did this judgment debt come about? It is the result of the failure of the NPP Government to honour contractual obligations and the flagrant disregard to pay even when judgments had been given by both local and foreign courts and arbitration panels.

In the circumstance, at the end of September this year, the judgment debt outstanding was a staggering GH¢560.0 million.

It was this dire situation that necessitated our 2009 budget focusing on macroeconomic stability and fiscal consolidation within the context of our medium-term plans for accelerated and sustained growth.

Restoring prudence in managing our resources, therefore, is an important part of what we have achieved in 2009. Because of our prudent economic management, our target for drastically reducing the budget deficit in 2009 is largely on track.

The successes achieved so far have been the result of sound, well-crafted, purposeful policy-making and effective implementation.

The Government is desirous of preserving these hard-won gains. In doing so we are particularly focused on ensuring equity in the distribution of the wealth of the nation and not concentrating wealth in the hands of a few.

Those who suffer most when our economy is badly managed are the poor, the ordinary farmers, and the working people who are severely taxed by inflation even as their income remains stable. Our efforts at stabilizing the economy and preventing runaway inflation have protected the value of the income of the majority of our population.

With the fiscal consolidation and macroeconomic stability achieved through the implementation of bold and sound economic policies, coupled with the understanding and support of our people, the 2010 Budget ushers in the government's growth and strategy framework towards a "Better Ghana".

This framework captioned "Growth and Stability" identifies a comprehensive set of policies to support Government's Medium Term Growth Strategy in a manner that will be sustainable. It focuses on a progressive program of development through job creation intended to improve the quality of life of our citizenry.

The tools for achieving the objectives of this Growth and Stability budget are:

• Sustenance of the macroeconomic stability and fiscal discipline achieved in 2009;

• Positioning the country for a sustained growth through the modernization of agriculture, provision of key infrastructure development, oil and gas projects, private sector development, ICT; and

• Delivery of social programmes targeted at poverty reduction.