OccupyGhana, a pressure group, has harshly criticized the government for the present economic catastrophe that has forced it to establish a debt swap scheme.
Instead of the Russia-Ukraine conflict, the economic crisis, according to OccupyGhana, is the result of the government's failing, risky economic plan that relied on significant borrowing from the foreign market to fund expenditures, settle maturing debt, and sustain the cedi.
"Although the administration would want to lay the blame for this catastrophe on the pandemic and the Russia-Ukraine war, it cannot deny or escape the truth that our debt was unsustainable even before these outside events intervened and exacerbated an already vulnerable position."
In an effort to lower the nation's debt load, the government on Monday started the Debt Exchange Program.
Due to the debt restructuring, domestic bondholders will receive interest payments that are zero percent in 2023 and five percent in 2024.
According to OccupyGhana's statement, dialogue and the agreement of all stakeholders are necessary since the government is not authorized by law or the constitution to unilaterally impose new terms on portfolio investors.
The complete statement from OccupyGhana is below.
OCCUPYGHANA Press release
Ghana, December 7, 2022
GHANA'S CURRENT ECONOMIC SITUATION - OUR ADDITIONAL CONSIDERATIONS AND SUGGESTIONS
The remarks made by the Finance Minister about the restructuring of portfolio investments have been highlighted by OccupyGhana with great concern.
Although the suggested "haircuts" are necessary for IMF support, the many Ghanaians who took part in these investments find them to be incredibly painful.
Simply put, Ghana has gone bankrupt under the watch of this administration due to circumstances that might have been avoided and are unacceptable.
As we stated in our press release dated October 28, 2022 (Our ref: OG/2022/050) and titled "GHANA'S CURRENT ECONOMIC SITUATION - OUR THOUGHTS AND PROPOSALS," the country would not be in this predicament if not for the government's failed, risky economic strategy, which involved borrowing heavily from the international market to fund expenditures, pay maturing debt, support the cedi, and possibly control the impact of
This dangerous tactic essentially depended on luck and exceptionally skillful economic management, both of which fell short.
Therefore, despite the government's attempts to attribute the catastrophe on the pandemic and the Russia-Ukraine war, it is impossible to ignore or dodge the truth that our debt was unsustainable even before these outside events intervened and exacerbated an already perilous situation.
TWO GENERAL REMARKS
We have two major points to make regarding the statements asking Ghanaians to sacrifice money they have rightfully earned in order to assist the government in resolving the crisis it has caused.
First, we see the remarks made by the finance minister as nothing more than a government offer to institutional portfolio investors to accept new conditions that differ from those that were used to purchase the government's assets.
We believe that the law and the Constitution do not grant the government the authority to unilaterally impose new terms on portfolio investors; instead, negotiations and the permission of all parties are necessary.
Second, the millions of Ghanaians whose assets (pension or otherwise) have been invested by institutional fund managers in Government securities would be the ultimate losers in this new offer, notwithstanding the assertions that ordinary investors are shielded from the planned "haircuts."
That's because those fund managers will just pass the reductions along to their patrons.
The awful effects that this situation has had and will have on Ghanaians cannot possibly be overstated.
We thus think that any proposal to the people, who are already suffering from the various consequences of inflation and cedi devaluation, to basically bail out the government from its self-inflicted catastrophe, must be accompanied by an acknowledgement of mistakes and a clear pledge to improve.
RECOMMENDATIONS: TEN
As a result, we provide the government our list of 10 potential actions.
First, at least 50% less government appointees should be employed.
This might be accomplished by merging several ministries, reducing the number of political appointments (ministerial and otherwise), such as all deputies and the like, and giving public servant-technocrats the duty of assisting substantive leaders.
In these trying and terrible times, this will convey a strong message that the government is committed to improving while asking the public to make sacrifices.
Allow the president to pay income taxes as well, please.
Article 68(5) of the Constitution's tax exemption for the president should be repealed.
Even while the savings that result from this may not be large, they are still highly meaningful and symbolic.
The president must set the bar high.
He may demand that the rest of us pay taxes until he pays his own.
Third, it's time to explain the alleged "benefits of article 71."
Ghana must put a stop to the three-decade-old broad conspiracy among the political elite that takes advantage of Ghana under the pretext that article 71 permits so-called "ex gratia payments."
Ex gratia claims that are made over various administrative or governmental phrases must be eliminated since they are illogical and difficult to defend.
Additionally, we must immediately put an end to the deceptive plan that sees succeeding administrations purposefully postpone the formation of the emoluments committee until the conclusion of their terms. As a result, salaries and emoluments are essentially agreed upon and calculated at the "midnight" of the departing administration, discussed and adopted in secret with very little debate, and then applied retroactively.
The massive payouts to the government and legislature are only revealed to Ghanaians after the event.
To know what and how much the political players are entitled to when they take office, we require that the committees be constituted at the beginning of each government.
The committees must be set up right away by the existing administration.
Fourth, review all tax exemptions, particularly those given to profits and income from investment portfolios.
Section 7(1)(p) to (v) of the Income Tax Act, 2015 (Act 896) must be amended immediately by the government to eliminate all or a portion of the exemptions for income and profits from portfolio investments.
We suggest enforcing a particular, time-limited withholding income tax scheme on such profits because these are not usual periods.
When we have recovered, Ghana could think about renewing the exemptions.
Fifth, expand and formalize GRA's invigilation efforts.
The legal penalties for tax evasion and underreporting must also be strictly enforced.
Sixth, describe the proposed Financial Stability Fund's financing source (FSF).
Extreme openness in the suggested program's development and execution is necessary.
Where would the funds for the FSF come from if the government needs a bailout from the IMF because it is bankrupt?
Seventh, pursue the surcharges and disallowances made by the Auditor-General.
When it comes to prosecuting people who the Auditor-General has determined have cost Ghana money, the government needs to act seriously.
As far as we know, the government is doing nothing to enforce the surcharges and disallowances made by the Auditor-General.
With terrible haste, the president ordered all institution heads to provide him the names of everybody named in the Auditor-reports General's as having caused the state to suffer losses.
The time set by the president has passed without any word from him or any indication of whether he received the names or what he planned to do with them.
8th, terminate the galamsey.
The galamsey threat must be urgently addressed by the government since it is destroying the ecology and stealing our natural resources.
The widely reported Kumasi meetings do not seem to have produced any results.
Along with numerous other prior declarations on this, we have contacted the president at least nine times in the last six weeks to urge him to properly regulate artisanal mining for the good of the country.
They are all being disregarded.
If we allow this canker to suffocate any upcoming economic recovery, our current efforts will be for naught.
Ninth, cut all unnecessary government spending. Prioritize government initiatives and spending with a razor-sharp focus, and make sure there is a direct link to future GDP growth.
Additionally, the government is required to submit monthly updates on the financial results of all previously stated cost-saving initiatives.
We urge in particular the cessation of all payments and benefits given to those chosen by the government to serve on various boards.
Additionally, we advise stopping all spending on the projected National Cathedral.
Any justifications for spending money that is no longer available on the projected National Cathedral have been undermined by the country's poor financial situation.
The budget's ongoing pledge to invest GHS80M on the cathedral appears to be a vanity project given our current circumstances.
By delaying investment on that project until the economy improves, we gain nothing.
Tenth, make the president's signature programs more logical.
This covers the Free SHS program.
Every Ghanaian who is capable of paying should do so.
Only individuals who can demonstrate that they are unable to pay fees should be eligible for the plan.
In conclusion, a government must "bear fruits worthy of contrition" if it is appealing with Ghanaians to save it from a self-inflicted catastrophe.