A Former Minister of Finance, Mr Seth Terkper, has accused the government of exaggerating the impact of COVID-19 on the Ghanaian economy to hide their inefficiencies.
He said although the pandemic had brought some challenges to the economy, the government is taking advantage of it to conceal what he describes as the mismanagement of the economy.
Speaking in an interview with the Graphic Business, he said arguments by the government that the projected huge budget deficit at the end of the year is as a result of COVID-19, could not be true.
“According to the COVID-19 report from the International Monetary Fund (IMF), which is the report that the IMF released before giving us the US$1 billion support, the budget deficit as a result of COVID-19 that the government disclosed to them was 2.5 per cent of GDP.
“So if add that 2.5 per cent to the 4.9 per cent originally projected deficit in the 2020 budget, that should give you around eight per cent so what is accounting for the over 11 per cent new projection?” he asked.
“If you look at the mid-year review, if you look at the adjustments that were made, they were not made on account of COVID because COVID was fully covered by the IMF and World Bank loans.
He said the adjustments that were made had to do with wages being under estimated, and interest payments being underestimated, which shot the deficit up.
“The adjustments which were made were not based on COVID,” he said.
Debt accumulation
Mr Terkper, also noted that claims by the government that it inherited a troubled economy was not factual, stating that the NDC government was better in the management of the economy.
He said over the last four years, the rate of debt accumulation had increased despite the government touting much lower fiscal deficits compared to those of the previous administration.
“If your deficit is low, then your debt should be low. It shouldn’t be increasing. The first problem that started to arise was showing a lower deficit—because if you check the financing, you are borrowing to finance the deficit so your debt should not be going up,” he stated.
He said the government in its attempt to paint a picture of exceptional performance in reining in the deficit, had excluded exceptional expenditure such as the cost of the financial and energy sector bailouts.
He added, however, that regardless of their exclusion from the computation of the deficit, these expenditures had to be financed, creating a larger public debt while creating the perception of a lower fiscal deficit.
Mr Terkper noted that before his administration left power, the Energy Sector Levies Act (ESLA) had already been conceived, and he questioned why the government did use the proceeds from the ESLA to bail out the distressed banks which were exposed to the energy sector during the power crisis.
Oil revenues
Mr Terkper also noted that in terms of oil revenue, for the greater part of the John Mahama-led administration, only the Jubilee Field contributed to the government’s coffers.
He said even with just one oil field, the administration contributed more to the economy in terms of transfers to the petroleum funds, leaving behind an infrastructure fund created with proceeds from the oil revenue as well as funds to retire some outstanding debts.
“Despite getting less oil revenue, the Mills-Mahama administrations put in more money for the utilisation of the statutory funds,” he said.
