It was an excruciating wait for the much anticipated and talked about budget; long before its release, Ghanaians were full of anxiety and thought the budget was going to be a load of bad news, bad enough to send them further into economic and financial distress.
Much of the fear and worry about the budget were generated by rumors that taxes would be increased, particularly VAT which was said to go from a mere 17.5 percent to an eye popping 21.5 percent. The fear, however, was clearly unfounded; there was no increase in VAT. Ghanaians have been given a temporary relief.
Did the government retreat — in the face of strenuous opposition from the Ghanaian public or did it take into account its political fortunes? Of course, both. One, an increase would certainly have incurred the wrath of Ghanaians, and two, the NPP did not want to commit political suicide with a tax increase.
Remember George H. Bush the former President of the United States who once assured his supporters at a Republican Party Convention in 1992 that, “Read my lips, no more taxes.” Well, harsh economic realities compelled him to increase taxes and he subsequently lost the elections to Bill Clinton. The NPP does not want to suffer the same fate as its American ideological soulmate.
For now though VAT won’t be padded/increased, but the government’s decision is not reassuring enough. Ghanaians will remain wary for one major reason.
The economy is struggling mightily as the finance minister publicly admitted, and it needs a massive infusion of cash to operate efficiently and create jobs. Where is that revenue going to come from is the fundamental question that should be asked.
Taxes are significant sources of revenue, and the government cannot run away from this fact; somewhere down the road, the government will look for money to provide services, and it will without any scintilla of doubt increase VAT or else its financial difficulties will continue to mount.
And what is sure to make matters worse for this government is its continued failure to address the problem of the rapidly falling cedi. A depreciating currency is a huge signal that an economy is in the doldrums.
Mr. Ken Ofori Atta, was disingenuous when he attributed the cedi’s depreciation to external factors. He did not once identify those factors. The fact remains, however, that the cedi’s weakness has everything to do with the government’s poorly executed financial and economic policies presided over by the finance minister.
Mr. Atta mentioned with pride that the country will exit the IMF credit facility program at the end of the year after completing six reviews. This could put Ghana on track to economic recovery, he added. I have my doubts about the resilience of our economy to perform in such a way that it won’t need the financial assistance and guidance of the IMF.
At face value, the midyear budget was not inspirational; if anything at all, it was depressing. For one thing, it was a rehash, a carbon copy of the 2017 budget only this time it was buttressed/accompanied by the oft-repeated NPP complaint that the government inherited a weak economy.
And for another, it failed woefully to lay out in concrete terms what exactly has been done by the ruling NPP to address the numerous economic and financial challenges facing the nation and its nearly 30 million residents.
Ghanaians are desperately looking for permanent solutions to their problems. This budget unfortunately was woefully inadequate and did not provide answers to their questions.
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