According to OccupyGhana, the government’s failed, risky
economic strategy that relied on heavy borrowing from the international market
to fund expenditure, pay the maturing debt, and support the cedi is what has
created the economic crisis and not the Russia-Ukraine war.
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“Although the government would seek to blame the pandemic
and the Russia-Ukraine war for this disaster, it cannot evade or avoid the fact
that our debt was unsustainable even before these external factors kicked in
and compounded an already precarious situation”.
The government launched the Debt Exchange Programme on
Monday as part of efforts to reduce the country’s debt burden.
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The debt restructuring will see a slash in interest payments
for domestic bondholders to zero percent in 2023 and five percent in 2024.
In its statement, OccupyGhana suggested that the Government
has no power under the law and the Constitution to unilaterally impose fresh
terms on portfolio investors; negotiation and the mutual consent of all parties
will be required.
Below is the full statement by OccupyGhana
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OCCUPYGHANA PRESS STATEMENT
Accra, 7 December 2022
GHANA’S CURRENT ECONOMIC SITUATION – OUR FURTHER THOUGHTS
AND PROPOSALS
OccupyGhana has noted, with considerable concern, the
Finance Minister’s announcements on restructuring portfolio investments.
While IMF support depends on the proposed ‘haircuts,’ they
are extremely painful to the many Ghanaians who have participated in these
investments.
Simply, under this government’s watch, Ghana has become
broke under circumstances that were avoidable and are inexcusable and
unpardonable.
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As we stated
in our press release dated 28 October 2022 (Our ref: OG/2022/050) and titled
GHANA’S CURRENT ECONOMIC SITUATION – OUR THOUGHTS AND PROPOSALS, the nation
would not be in this situation but for the government’s failed, risky economic
strategy that borrowed heavily from the international market to fund
expenditure, pay maturing debt, support the cedi and possibly control the
effect of the depreciation on inflation.
This risky strategy effectively relied on good fortune and
extremely astute economic management, both of which failed.
Thus, although the government would seek to blame the
pandemic and the Russia-Ukraine war for this disaster, it cannot evade or avoid
the fact that our debt was unsustainable even before these external factors
kicked in and compounded an already precarious situation.
TWO BROAD COMMENTS
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We have two broad comments on the announcements that request
Ghanaians to forego legitimately earned funds to help the Government out of the
disaster it has created.
First, we consider the finance minister’s announcements as
nothing more than an offer from the government to institutional portfolio
investors to accept new terms that vary the terms under which the latter
acquired the Government’s securities.
We think that the Government has no power under the law and
the Constitution to unilaterally impose fresh terms on portfolio investors;
negotiation and the mutual consent of all parties will be required.
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Second, notwithstanding the claims that individual investors
are insulated from the proposed ‘haircuts,’ the millions of Ghanaians whose
funds (pension or otherwise) have been invested by institutional fund managers
in Government securities, will be the ultimate losers in this new offer.
That is because those fund managers will simply pass the
cuts on to their clients and customers.
There is simply no way to understate the terrible
consequences that this state of affairs has caused and will cause to Ghanaians.
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That is why we believe that any offer to the citizens, who
are already hit with the multiple effects of inflation and cedi depreciation,
to essentially bail the government out of its self-afflicted disaster, must
come with an acceptance of failures and a firm commitment to do better.
TEN RECOMMENDATIONS
We, therefore, recommend 10 things that the government may
act upon.
First, reduce the number of government appointees by at
least fifty per cent.
This may be achieved by consolidating several ministries and
slashing the number of political appointees (ministerial and otherwise), such
as all deputies and the like, and entrusting public servant-technocrats with
the responsibility of supporting substantive heads.
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This will send a powerful message in these tough and painful
times that the government is serious about its commitment to doing better while
requesting sacrifices from the general public.
Second, let the president pay income taxes, too.
We should remove the tax exemption granted to the president
under article 68(5) of the Constitution.
While the actual savings from this might not be much, it is
hugely significant and relevantly symbolic.
The president must lead by example.
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When he pays his taxes, then he can demand that the rest of
us pay taxes too.
Third, it is time to rationalise the so-called ‘article 71
benefits.’
Ghana needs to end the three-decade-old grand conspiracy
among the political class that milks Ghana under the false argument that
article 71 authorises so-called ‘ex gratia payments.’
We must eradicate the multiple claims of ex gratia; the multiple
claims over different administrative/government terms do not make sense and are
difficult to sustain.
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We must also immediately end the false scheme by which
successive governments deliberately delay the setting up of the emoluments
committee till the end of their terms, so that salaries and emoluments are
agreed upon and calculated literally at the ‘midnight’ of the outgoing
government, considered and adopted in secrecy to precious little debate, and
then applied retrospectively.
Ghanaians only get to find out the huge pay-outs to the
executive and legislators after the fact.
We demand that the committees are established at the start
of each government so that we know what and how much the political actors are
entitled to when they assume office.
The current government must establish the committees NOW.
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Fourth, revise all tax exemptions, especially those granted
to incomes and gains from portfolio investments.
The government must, as a matter of urgency, amend section
7(1)(p) to (v) of the Income Tax Act, 2015 (Act 896) to remove all or some of
the exemptions on incomes and gains from portfolio investments.
These are not normal times, and we propose imposing a
specific, time-bound withholding income tax regime on such earnings.
Ghana may consider re-granting the exemptions when we have
recovered.
Fifth, intensify and institutionalise GRA’s invigilation
activities.
In addition, the legal sanctions for under-reporting and tax
evasion must be drastically applied.
Sixth, explain the source of funding of the proposed
Financial Stability Fund (FSF).
Extreme transparency of the proposed programme and its
implementation is required.
If the government is broke and requires an IMF bailout,
where will the monies for the FSF come from?
Seventh, pursue the Auditor-General’s disallowances and
surcharges.
The government must show some seriousness in pursuing those
the Auditor-General has found to have caused loss to Ghana.
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To the best of our knowledge, the government is doing
nothing to enforce the Auditor-General’s disallowances and surcharges.
The president issued a terribly belated instruction to heads
of institutions to provide to him the names of all persons identified to have
caused losses to the state in the Auditor-General’s reports.
The president’s deadline has come and gone with no
communication or indication on whether the names were indeed supplied to the
president, and what the president is going to do with them.
Eighth, end galamsey.
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The government has to address the galamsey menace as a matter
of urgency, as our natural resources are plundered and the ecosystem destroyed.
The much-publicised Kumasi meetings do not appear to have
borne fruit.
We have written to the president, at least, 9 times in the
past six weeks, in addition to several other previous statements on this,
challenging the government to properly regulate artisanal mining in a way that
benefits the nation.
They have all been ignored.
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Our current efforts will come to nothing if this canker is
allowed to overcome any future economic recovery.
Ninth, slash all non-critical government expenditures.
Implement a ruthless focus on prioritising government projects and
expenditures, and ensure a strict relationship to GDP growth going forward.
And, the government must provide monthly reports on how much
money all announced cost-saving measures have delivered.
We specifically recommend the suspension of all fees and
allowances paid to persons appointed by the government to serve on various
boards.
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We also recommend suspending all expenditures on the
proposed National Cathedral.
Whatever arguments there might have been to support spending
now-non-existent money on the proposed National Cathedral, have been eroded by
the dire straits that the nation faces.
Our current situation makes the continued commitment in the
budget to spend GHS80M on the cathedral, look like a vanity project.
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We lose nothing by suspending expenditure on that project
until the economy recovers.
Tenth, rationalise the president’s flagship programmes.
This includes the Free SHS scheme.
Every Ghanaian who can pay fees should pay.
Limit the scheme to only those who can prove that they are
not capable of paying fees.
In conclusion, a government that is pleading with Ghanaians
to bail it out of a self-afflicted disaster, must ‘bear fruits worthy of
repentance.’
SOURCE: CITINEWSROOM
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