A Pledge to Keep: NPP budget and the election promises

By: Jamila Akweley Okertchiri

Promises made during electioneering campaigns are often taken with a pinch of salt because politicians rarely stay true to the timely fulfilment of their pronouncements.

Ghana’s 2016 election was not devoid of this politicking characteristic, as all the presidential candidates pledged to introduce policies that would change the fortune of the country if elected into the highest office of the land.

However, the promises that stood out throughout the activities leading to the 2016 elections were the New Patriotic Party (NPP) promises.

Led by now President Nana Addo Dankwa Akufo-Addo, the NPP made some groundbreaking utterances that critics downplayed as unattainable.

Notable among them were the famous free senior high school, ‘one village, one dam’, payment of teacher and nurses’ allowance, reduction of electricity tariffs, reduction of water bill, ‘one district one factory’, reduction of corporate tax to 20 percent and creation of jobs for all graduates.

The NPP further promised to abolish some other taxes, including removing import duties on raw materials and machinery for production, abolishing the special import levy, abolishing the 17.5 percent VAT on imported medicines not produced in the country, among others.

These promises of the NPP were viewed by critics as over-ambitious and, therefore, could not be implemented within their first tenure, considering the country’s economic state.

But, President Akufo-Addo in his State of the Nation Address 10 days ago maintained his stance on ensuring the promises he made are materialised as fast as possible.

“I will not announce policies and programmes which I know I cannot fulfil. I respect Ghanaians far too much to lie to them. We are going to implement all the policies for which we have said we would, and in particular, the ‘1-district-1-factory’ policy to help bring progress and prosperity to all parts of Ghana,” he said.

2017 Budget Statement

Thus, the expectation of the country was heightened when the Minister of Finance, Ken Ofori-Atta, walked into the people’s representative chamber on Thursday, March 2 to deliver the 2017 budget for the country.

Traders, retailers and businesses were keen on listening to the budget that would broadly outline the vision and policy direction of the NPP government.

Mr Ofori-Atta preceded the reading of the budget before the august House with a statement that it reflects the vision of hope, of jobs and wealth creation and of a robust economy that supports a thriving private sector.

“With this budget, I present to you the policies, strategies and actions we will undertake to deliver the president’s vision,” Mr Ofor-Atta told parliamentarians.

Admitting the challenging economic times the country faces, the finance minister said the policies were deliberate but urgent, well thought-out strategic steps that needed the backing and total support of the Ghanaian people.

“I am confident that we have the human resource, especially in this House and in our Diaspora community, the experience, and most importantly the sounding mandate of the people to guide and inspire us,” he said.

Mr Ofori-Atta stated that the NPP government would strike the right balance between fiscal consolidation and growth by making credible policy choices that would create the fiscal space to implement growth-enhancing initiatives.

He, therefore, announced government’s decision to abolish eight taxes and reduce four others, many of which were set by the previous government.

They include one percent special import levy, 17.5 percent VAT on financial services, 17.5 percent VAT on selected imported medicines, import duties on raw materials and machinery, 17.5 percent VAT on domestic airline tickets, five percent VAT on real estates, excise duty on petroleum, duties on importation of spare parts and levies imposed on ‘kayayeis’ by local authorities.

“This will reduce the cost of doing business and create a conducive climate for investment and job creation,” he explained.

Projects

Other projects aimed at enhancing the socio-economic well-being of Ghanaians were also outlined by the sector minister:

Establishment of the Infrastructure for Poverty Eradication Project (IPEP), where every constituency will be allocated the cedi equivalent of US$1million to combat poverty and improve the lives of rural dwellers and deprived communities, implementation of the ‘one district one factory’ programme, establishment of the Zongo Development Fund to support the provision of critical infrastructure and services and roll-out of the National Identification Scheme (NIS) to facilitate the efficient delivery of public and private services can help formalise the economy.

Roll-out of free SHS to ensure equal opportunities for all and enhancement of human capital for the country, roll-out of a national digital addressing system to provide unique addresses for all properties in Ghana and restoration of teachers and nurses’ training allowances, among others.

Protection of Public Purse

Touching on corruption and reduction of waste in the public sector, Mr Ofori-Atta indicated that the NPP-led administration will adhere to and maintain good economic governance principles of fiscal discipline, accountability and transparency.

“To reiterate what the president said, we will protect the public purse by guaranteeing value for money in all public transactions, and exercising prudence and discipline in our fiscal management to deliver on the aspirations of the Ghanaian people,” he added.

Mr Ofori-Atta said inefficiencies and waste in government spending will not be tolerated and there will be strict enforcement of all relevant laws and regulations, especially the new Public Financial Management Act, 2016 (Act921).

“Government will pursue an effective debt management strategy to ensure debt sustainability. We will also adopt global standards of risk and treasury management to ensure accountability in the use of state resources,” he added.

Less Borrowing

In addition to ensuring the public purse is protected, the amount of government borrowing and the resulting crowding out of the private sector and accelerated growth will be reduced by empowering the private sector, according to the finance minister.

To accomplish this, Mr Ofori-Atta mentioned that the NPP will shift the focus of economic management from taxation to production.

“Mr Speaker, we cannot borrow our way out of these challenges. This will be tantamount to creating and sharing poverty, which only leads to a loss of our fiscal sovereignty; so like the president, we must all be in a hurry to grow our way into prosperity,” he said.

Funding Sources

Announcing the source of funds for the many policies and projects outlined by the NPP government, Mr Ofori-Atta pointed out that GHS342.0 million will come from the ABFA, GHS785.0 million from tax revenue and GHS1.08 billion from the realignment of statutory funds.

“Mr Speaker, in addition to funding, these significant numbers of programmes with lesser resources than was spent last year, we have allocated over GHS700 million for capital expenditure seven times more than was allocated last year, funded NHIS and free SHS, provided tax relief for the private sector and all other socio-economic classes.

We have also reduced levies on petroleum products, reduced electricity prices, provided a stimulus for the private sector and agriculture and brought down the deficit from 8.7 percent to 6.5 percent,” he disclosed.

That, he said, has been done through prioritisation of expenditures and planned improvement and efficiency in government spending.

Reactions

Mixed reaction greeted the reading of the 2017 budget, while there were spontaneous expressions of excitement across some sectors of the economy, especially those from the opposition.

Former Finance Minister, Mr Seth Terpker, said the tax reliefs mentioned in the budget were out of place, warning that the country will soon return to an era of heavy subsidies.

“We can’t continue to tax the traditional sectors of the economy, leaving out the sectors that are growing, excluding the services sector which is the largest revenue earner,” Mr Terkper said, adding that “you cannot perpetually leave the services sector out of the tax net.”

According to him, with the removal of taxes on spare parts and raw materials, Ghana is likely to see “erosion of our tax base moving into other countries” as these products will be smuggled to neighbouring countries “because already, Ghana is a transit point.”

But traders, business facilities, utility services and professionals have shown great excitement at the policy interventions outlined in the NPP government’s manifesto.

The Chairman of the Association of Used Auto Parts Dealers (ASUPAD), Sammy Siaw, muted his appreciation to government for the new policies and project.

“Very soon, we would stage a demonstration. Our route will be from Abossey Okai all the way to the Flagstaff House. We would be clad in white to go and say a big thank you to the president for the bold decision…,” he said.

Mr Siaw pointed out that the group will have a double dose and benefit from the budget and “these are all parts of the litany of items we presented to the government…but he has honoured two and we are happy, we can relax because of this move…”

A trader who has been in the business for 10 years expressed his happiness, saying, “Nana Addo has done very well. Personally, I am very happy he is fulfilling his promises. There are much more he needs to do. I am hopeful he will accomplish the rest.”

“This is good news to us. We will also reduce the prices of our goods if they implement this new policy. This will mean more people will buy from us and we will make more money to also take care of our families,” he stated.

Pru East MP and a former Power Minister, Dr Kwabena Donkor, said the budget “sounds beautiful on the edges but the core is cosmetic, because the NPP promised to scrap the energy sector levies, but surprisingly, did not touch.”

In his view, the promise by the NPP to abolish corporate income tax, which had not been captured in the budget statement, was deceitful.

Lawra legislator, Anthony Karbo, however, described the budget as a “people and business-friendly budget the country has ever seen. This budget will bring the needed relief to our people.”