Ghana: TUC Cautions Govt Against Overspending in Election Year

7 November 2019

The Trades Union Congress (TUC) has cautioned government against any pressure whatsoever to overspend on vote winning projects as the country enters into an election year.

In a 13-page document it described as its inputs for the 2020 budget expected to be read in Parliament next week, the TUC said it would not hesitate to hold government "to its own promise that it will not repeat this mistake."

To them, government must demonstrate that Ghana can go through elections and remain fiscally prudentby adhering to the dictates of the Fiscal Responsibility Act.

"As we enter another election year there is the temptation to spend on vote-winning projects that neither improves livelihoods of the people nor enhances the potential for future growththereby totally destroying whatever gains we have made in previous years and set ourselves up for another painful and unnecessary International Monetary Fund (IMF) policies that destroy livelihoods and lower standards of living.

"The 2020 Budget Statement should signal a complete departure from this negative trend. Government should use this budget to show that, in fact, we are no longer under the grips of IMF and that we are a sovereign country deciding and taking responsibility for our policies and our future," it contended.

TUC's concerns follow predictions by the IMF and The Economist Intelligence Unit (EIU) of the tendency by government to overspend in the run up to the 2020 elections.

While the IMF advised government to craft and execute the 2020 budget carefully to avoid reversing gains made in stabilising the economy, the EIU anticipated government to record a 5.5 per cent budget deficit come next year even though it had passed the Fiscal Responsibility Act last year, aimed at limiting future budget deficits to a maximum of five per cent of GDP.

According to the Trades Union, the 2020 budget must provide impetus to implement home grown policies having exited the IMF.

"We expect policies that strengthen macroeconomic framework and also ensure that economic growth and other indicators have real meaning for Ghanaians. The budget must outline practical measures to support domestic production and reduce national dependence on imports for basic products," it urged.

Touching on other areas such as employment and cost of living, the TUC in its statement called for a change in economic policy to create more employment in the country.

It to this end called for a review of some job driven government interventions such as the Nation Builders Corps (NABCO) to assess the existing modules and ascertain those that are making positive impacts while re-designing others that are not working.

"We expect the 2020 budget to deal with the high cost of living. The regressive taxes must be abolished. Taxes on fuel and basic utilities must be reduced to ameliorate the suffering of Ghanaians," the group appealed.

In order to grow local businesses, the TUC submitted that the country's trade policy is reviewed to support domestic businesses and production and drive job creation saying, "We can do so and still be in compliance with the rules of the World Trade Organisation (WTO)."

It held that "no amount of financial support to the private sector will suffice if they cannot find the market for their produce. The domestic and sub-regional markets are the most accessible and government must work to secure parts of these markets for them."

On the energy front, the TUC praised government for terminating the agreement with the Power Distribution Services (PDS) but urged it to investigate the source of the US$12.5 million paid by PDS as premium for the demand guarantee as well as the pressures mounted by the PDS and its domestic collaborators on the Public Utilities Regulatory Commission (PURC) to pass the cost of insurance onto consumers in the form of higher tariffs.

Moving forward, the Union urged that government shows transparency in public contracts, pledging its support to work with government to promote the good of Ghanaians.

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