Friday, January 16, 2009

NPP government should have been circumspect in spending – Dr. George Sipa Yankey

A member of the Atta Mills Transition Team sub-committee on economy and former Director of the Ministry of Finance, Dr. Sippah Yankey has pointed out that the state of the economy would have been healthier had the New Patriotic Party been more circumspect in their spending pattern.

According to Dr. Yankey the spending rate of the former administration coupled with its rate and terms of borrowing on the international market was detrimental to the country's economy.

Citing an example, he questioned the rationale behind the former administration's borrowing of an amount of USD750 million at an interest rate of 8.5 percent when the money was not used for investment projects which could yield returns which were over and above  the interest rate.

He pointed out that the country is currently paying over USD 60 million on the amount annually which sums up to over USD1.35 billion in the end due to the interest rate.

The NPP has come under great pressure to explain itself following information made available by the Country Director of the World Bank for Ghana, Mr. Mats Karlsson saying the Mills administration was inheriting an economy which was "extremely worrisome".

According a report from the World Bank, the NPP administration had run a budget deficit of 13 percent.

The Vice President, John Mahama earlier in the week had alleged that the previous government had left a budget deficit of between 10 to 13 percent of the nation's Gross Domestic Product.

The Minority Caucus in Parliament on January 15 however held a Press conference to refute the assertion by the World Bank and the Vice President where they put the deficit figure at 7.5 percent saying it was mainly due to due to the world food crisis and the high prices of crude oil.

The party accused the World Bank of doctoring figures in order to win favour with the NDC and also because the NPP refused to heed to the Bank's directives not to increase the salaries of public sector workers annually.

Dr. Yankey in an interview on the Citi Breakfast Show however said investigations by the Transition Team of the NDC had revealed that "state of economy is very bad"  and worse than they had anticipated.

He said the team had uncovered some "huge transfers" of monies which were approved in the last few days before the handing over of political power was completed. He said however that the details were yet to be verified from the office of the Accountant General and the Ministry of Finance.

He noted that the party's position on the poor state of the nation's economy had been confirmed by the report of the World Bank.

He said a letter dated the 1st January 2009 from the Country Director of the World Bank for Ghana, Mr. Mats Karlsson to President Mills and Governor of the Bank of Ghana; spoke in its second paragraph of a worrisome national economy.

Dr. Anthony Osei who is a former Minister of State at the Ministry of Finance in the Kufuor administration reiterated to the NPP's displeasure with the stories and reports by the World Bank which he felt had created confusion in the minds of many Ghanaians.

He admitted that the nation's deficit was in the range of 13.8 percent of the nation's GDP.

He pointed out that the NPP was not contending with the figures or numbers concerning the deficit but pointed that there was the need to take cognizance of the reasons why the situation was so. He said the reasons for the figures are easily explainable and most of it is not likely to reflect in the 2009 economic year.

He added that the expenditure in 2008 was peculiar and unplanned for and thus urged that matters be put in their proper perspective.

Dr. Sippah in response said he appreciated Dr. Akoto's acceptance of the state of the economy and noted that the NDC faced a similar situation in the close of the year 2000 when the dynamics and instability of the world economy resulted in an inflation figure of 40 percent.

In his defense however, Dr. Akoto noted that it was only in the Kufuor administration that the country was able borrow legitimately from the capital market euro bond for infrastructural development. He also said the nation's B+ credit rating was the reason why Ghana was able to borrow the amount it did.

He said the investments in the roads and infrastructure were legitimate and noted that some years down the line the NDC will be appreciative of the initiative. 



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