The Dean of the University of Cape Coast Business School, Prof. John Gatsi has described the just approved 2021 Budget of the President Akufo-Addo led government as a ‘hardship budget”.
In an article published sighted by Awake News earlier, the financial economist said even though the country is out of the IMF programme, it has imposed tougher measures on citizens to “correct economic and financial crises”.
“Austerity measures are tough measures imposed on citizens to correct economic and financial crises. The economics and financial crisis may be in the form of excessive borrowing from the central bank, excessive public debt portfolio, interest payments beyond public investment expenditure, and in some cases closer or above compensation.”
According to him “In the 2021 budget more than Ghc35billion is allocated to cater for interest payments while about Ghc30billion is allocated to compensation, adding “In the 2021 budget interest payments have been given preference above compensation to avoid defaulting.”
Prof. Gatsi revealed that “Another sign that may trigger the presence of austerity is a double-digit deficit for which desperate measures such as the introduction of multiple tax measures and levies are imposed”, explaining that “The interesting thing is that the projected fiscal deficit of 9.5% will translate into about Ghc31billion new borrowing in 2021. If new borrowing in a fiscal year is very close to interest payment then borrowing may not be for investment purposes. In a well-structured economy, compensation should be seen as an investment to ensure productivity and fair treatment of workers.”
The lawyer also stated that “Inordinate borrowing from the Bank of Ghana of about a Ghc22billion is a violation of fiscal and monetary policy rules as fiscal dominance threatens the efficiency of monetary policy efforts.”
On the labour front, Prof. Gatsi said “The government has signaled labour of difficulty in improving wages and compensation to reflect the erosion of living standards due to the financial crisis facing the country.”
For him, “The government is implementing an austerity budget with a blinked eye over the apparent difficulties facing ordinary people and workers. Ghanaians are used to austerity programs occasioned by the International Monetary Fund (IMF) program but this one is imposed deliberately by our own government.”
He emphasized that “Whether or not austerity programs are directed by IMF or our government, desperate taxes and levies are imposed. Public debt levels impose repayment burden and deprive the country of commensurate investment in public infrastructure. The Period is characterized by hardship and erosion of income.”
“An attempt to interfere with the constitutional insulation of the budgetary process for the judiciary and a bitter pill to public sector workers of the inability of the government to ensure significant wage adjustment show that austerity and hardship have been pronounced. Already, some private sector businesses are not able to pay the existing minimum wage hence pronouncement by the government is an incentive to deteriorate wages by these private sector entities.” – He added
“Anytime government calls on overburdened citizens to sacrifice more, you know hardship and austerity are recognized. Calling on citizens to pay for free water and electricity enjoyed by a very small percentage of the population in 2020 is of serious concern to Ghanaians.” – He said
By: Efo Korsi Senyo / awakenewsroom.com