GHANAIANS HAVE been advised to brace themselves for tougher measures as government goes into negotiation with the International Monetary Fund (IMF) for a bailout.
This, according to the Minority caucus, is as a result of the country's weakness in terms of economic fundamentals since February 2014 and therefore has marginal negotiation strengths with the Fund.
The Minority caucus stated that �on the basis of data provided by the Ministry of Finance itself, it is our considered opinion that the economic fundamentals have gotten worse since February 2014.�
The IMF is in the country to start discussions with authorities for a possible program to help boost investor confidence for the country�s homegrown policies.
Leading government�s team for the discussion is longest serving Finance Minister, Kwesi Botchway, but the minority believes his presence will not change the facts about the economy as they meet the Fund.
Addressing a press conference at the party headquarters in Accra yesterday on the true state of the economy and the implications of the IMF program, Minority spokesperson on Finance, Dr. Anthony Akoto Osei said �aside the basic issues relating to revenue generation and expenditure rationalization measures, which will form the core of the negotiation, at least three important issues to contend with will be conditionality of Millennium Challenge Compact two, loans in the pipeline and the adjustment formula in the petroleum sector as we engage the Fund.�
Dr. Osei, who is also the Member of Parliament for Old Tafo, said while negotiations will focus on expenditure rationalization and revenue mobilization measures, there will be discussions on sectorial issues which will affect expenditure, or revenues or both.
He said in order to access the grant, the government must demonstrate substantial compliance with the Electricity Distribution Utility Payment Action Plan and thus put forward a credible plan to pay all the old arrears owed by government agencies to ECG and NEDCo prior to the coming into force of the compact.
Dr. Osei further indicated that �our gross international reserves in months of imports have dwindled to 2.2 months of imports and the net reserve is for just seven days; our trade deficit is now well over US$4 billion; the fiscal deficit was 10.8 per cent in 2013 or about the GHC12 billion.�
According to him, the manufacturing sector was also suffering decline as a result of the ongoing power crisis in the country adding that �industry does not have access to long term credit; excessive government borrowing has squeezed industry out of short term credit; industry is almost suffocating because of huge taxes; water supply to industry is erratic and expensive.�
He added that the finance ministry reports of substantial shortfalls in revenue generation among all revenue types with the exception of corporate taxes on oil and noted that as a result of a general decline in economic activities, the total shortfall in personal and corporate taxes, including fiscal stabilization levy was as much as GHC404 million.
The minority spokesperson further stated that Social Security contributions, GETFund and District Assembly Common Fund have not been paid for the 2014 fiscal year as at June 30, 2014.
According to him, the state of the economy has gotten worse over the period and further accused government of deliberately refusing to pay statutory funds.
Speaking on loans in the pipeline, he indicated that the country�s debt stock was creating serious problems for debt sustainability and the IMF�s mandate is to �ensure that member countries do not engage in practices that may endanger the country�s own financial system, as well as global financial infrastructure.�
Any program to be agreed upon will have to receive parliamentary approval and they will interrogate all the issues.
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