Chief Justice caught in drama over collapsed banks

Chief Justice Sophia Akuffo, on Monday surprised many people following the uniCredit Savings and Loans Company case against the Bank of Ghana (BoG) over the recent revocation of its license, when she changed the High Court Judge sitting on the case filed by a shareholder of the company, leaving the courtroom with lots of unprintable speculations.

The case was placed before the Human Rights Court presided over by Justice Nicholas Abodakpi, who started hearing on August 26, 2019, and adjoined it to September 2, to enable BoG respond to the writ, having pleaded late service.

However, lawyers for Kwame Ohene Boakye, the plaintiff, were shocked to discover that the case had been taken away from Justice Abodakpi by the Chief Justice and handed over to another High Court Judge; Justice George Kingsley Koomson, to start afresh.

Ahead of this sudden change, The Herald is privy to phone calls, secret meetings by officials of BoG, a National Security invitations with Minister of State at National Security, Brian Acheampong, the Director of Operations at National Security, Colonel Michael Kwadwo Opoku, the National Security Coordinator, Joshua Kyeremeh and Charles Nii TeikoTagoe, a Presidential Staffer at Jubilee House present all in an attempts to have the case dropped.

The plaintiff, who is also a lawyer by profession, has confirmed the interesting developments to The Herald, since he filed the writ.

The Herald’s checks at the court, has also revealed that the Justice Abodakpui, has since been sent packing to Ho, the Volta Region regional capital.

Kwame Boakye, is asking the High Court Human Right division to quash the Central Bank’s August 15, 2019, decision declaring Unicredit Ghana Limited insolvent and revoking its license to operate as a specialized deposit institution,

Multiple court officials familiar with the matter told The Herald that lawyer of BoG led by Accra-based lawyer, Frank Davies, had last week filed an application challenging the Human Right Court’s jurisdiction to hear the matter, but instead of allowing Justice Abodakpui to rule on the matter of jurisdiction, he was written to late last week, to hand over all cases before him and leave for Ho.

What makes this more bizarre is that ahead of the trial, court clerks were not prepared to receive and process the writ submitted to them on August 19, saying they had been warned not to accept any writ against BoG, especially coming Dr. Kwabena Duffour, owner of Unicredit and Unibank.

The Herald is informed that there were back and forth between officials of the High Court Registry and a clerk from Mr Ohene Boakye’s lawyers, until one of the lawyers stormed the Court Complex in Accra, with a threat to go to the media over the matter.

With the documents filed, serving officials of BoG equally became a challenge with security men and receptionists, saying they had been warned not to allow bailiffs to serve writs on the Central bank.

This led to the bailiff waiting and dropping the court documents in the car of an officer of BoG, who eventually agreed to sign as the necessary papers as proof of service.

With writ served on BoG, some seniors officers, including Dr. Maxwell Opoku-Afari, and Elsie Addo Awadzi, the First and Second Deputy Governors, put out a scheme to have Mr Ohene Boakye drop the case. As telephone calls could not yield any result, a meetings was scheduled at Kwabenya in the home of another officer of the BoG, who is related to the plaintiff.

With the Kwabenya secret meeting also failing to yield any result, Mr Ohene Boakye, was summoned to the National Security with Brian Acheampong, Col. Opoku, Mr. Kyeremeh with the surprise personality there Charles Nii Teiko Tagoe present.

The Herald was told Charles Nii Teiko Tagoe’s attempted to interrogate Mr Boakye, but was rebuffed by the plaintiff and the meeting ended inconclusively, because Ohene Boakye, according to The Herald’s National Security sources, decided to be uncooperative.

In court on Monday, Justice Koomson, adjourned the case to September 19, 2019 as a result of the inability of the BoG to serve lawyers of uniCredit with a motion they filed relating to the case.The new Presiding Judge, requested that both parties serve each other with all the processes in other to expedite the hearing.

The shareholders of uniCredit, Hoda Holdings and CDH, sued the Bank of Ghana and its governor, Dr. Ernest Addison, after the central bank revoked the license of the company.They want the court to quash the BoG’s revocation of their license which declared uniCredit as insolvent, thus compelling the company to cease operations.

Lawyer Emmanuel Darkwa and Frank Davies are the lawyers for BoG, while Lawyer Kwasi Adu-Mante is lawyer for Kwame Ohene Boakye. Aside asking the revocation quashed, Kwame Ohene Boakye also a shareholder, wants the court to refer the matter to arbitration.

The writ sighted by The Herald, said that the company cannot be described as insolvent, because it had an estimated GHc54 Million with Unibank, which had been taken over by BoG as part of the Consolidated Bank, and the majority shareholder of Unibank is in court with the same BoG fighting to have Unibank, back.

It explained that on March 20, 2018, the BoG, had appointed an administrator under Act 930 to take over and streamline the activities of Unibank.

The said appointment placed restriction on HODA Holdings, which gravely affected the company’s financial situation, but attempt are under way to retrieve the company’s investment with the Consolidated Bank.

Aside, a GHC54 million, Unicredit’s investment totaling an estimated GHC 164 million is also held by Unisecurities Ghana Limited, however, the said investment with Unisecurity, were impaired with the capital adequacy ratio contrary to the regulatory standards set by the BoG as a result of the takeover of Unibank.

The lawyers insisted that, BoG is aware of the situation Unicredit finds itself, as a result of BoG’s restrictions on the company to access its own funds through the receiver appointed to oversee the transaction occasioned by the revocation of Unibank license, yet went ahead to revoke the license of Unicredit.

The writ said that BoG, had acted beyond it powers under Act 930 by unduly interfering in the affairs of the Unicredit by revoking its license, adding the central bank’s inexplicable attitude, points directly to a premeditated agenda to cause it a grave economic hardship.

The writ insisted that as at August 16, 2019, Unicredit, was solvent in terms of Act 930.Ohene Boakye, described the decision by the BoG, as arbitrary, malicious and capricious, because it contravene the Constitution of Ghana.

Unicredit, further insisted that at no point in time, did BoG indicate to them that the company, had become insolvent to warrant a revocation of its license based on empirical facts, adding BoG’s action is purely on deductions informed by deliberate creation of an extreme difficult financial situation to induce the company and its shareholders to give away Unicredit.

The writ said Ohene Boakye, stands to lose gravely if the decision of the BoG is not quash by the High Court, adding that unless the Supreme Court restrains BoG, it agents, assigns will go ahead and take control and interfere with the operations of the company, to his detriment and the detriment of depositors of the company.

In announcing the revocation of the license of uniCredit last month, the Bank of Ghana said the savings and loans company’s adjusted net worth was negative GH¢221.32 million as of the end of May 2019 and revealed that its paid-up capital was impaired in violation of Section 28(1) Act 930.

The BoG report also said uniCredit’s adjusted capital adequacy ratio of negative 97.83percent as of the end of May 2019 was in violation of Section 29(2) of Act 930.

“This was mainly due to the non-performing related party exposures of GH¢160.10 million to uniSecurities which is far in excess of its negative net worth.”

“The institution has been breaching the statutory cash reserve ratio requirement since April 2018 while also it was unable to meet the deposit withdrawals of customers due to its severe liquidity challenges. The BoG received many complaints from the institution’s customers about their inability to access their funds. And the institution had a high percentage of non-performing loans,” BoG’s report remarked.

But in its affidavit, challenging the Central Bank’s decision in court, Hoda Holdings, said its funds of over GHC54 million were locked up with Unibank before it was forced to cease operations by the Bank of Ghana in 2018 and it has since been trying to retrieve it.

More to come!

Sex and sexuality in our jails: A tale of the predator and the prey

Sex plays an important role in our social lives. Apart from procreation, it brings to the participating individuals emotional and physical fulfilment required to keep them hale and hearty. A good sex life is believed to bring to the individual benefits such as lower blood pressure, reduced stress, improved mood, enhanced immune function, general fitness among others.

Sexuality, the way people express themselves sexually, is a subject which arouses diverse opinions in Ghana. This is because, the Ghanaian, traditionally, recognizes heterosexual relationships as the accepted form of sexuality. Homosexual relationships, though abhorred by the greater populace, is creeping into the Ghanaian society. Regardless the sexual orientation of an individual, sexual satisfaction remains the ultimate goal.

Prisons in Ghana house only adults, making it easy to assert that most incarcerated persons are sexually active. Among the many deprivations prisoners in Ghana endure is sex, as prison rules disallow all forms of sexual acts. Additionally, prison regulations make no provision for conjugal visits which permit spouses of incarcerated persons to spend intimate moments with their partners. Some prisoners, in the circumstance, resort to same-sex relationships to feed their sexual cravings.

How effective is the ‘no sex’ regulation?

Ghana, like other jurisdictions, house male and female prisoners in different facilities preventing any contact between the two sexes.

To alleviate the pains of imprisonment, some prisoners risk the consequences and engage in sexual acts as asserted in Erving Goffman’s 1969 work, ‘The Presentation of Self in Everyday Life’. He posited that, inmates may have to adjust their sexual practices while incarcerated by engaging in illegal methods in order to obtain certain forms of satisfaction.

The issue of same-sex relationships in our prisons is gradually becoming topical as prisons mirror the wider society. There have even been claims by some ex-convicts to the effect that same-sex relationships and rape exist in our facilities. Though most of these claims are blown out of proportion, there are certain levels of truth in them. An incident at the Ankaful Maximum Security Prison in June 2016 where a male prisoner slashed the penis of another prisoner who attempted to rape him paints a picture of how the act is viewed by a majority of prisoners. The practice, nicknamed ‘Kpee’, is treated as a taboo throughout Ghana’s prisons. That notwithstanding, there are few instances where prisoners report attempted rape by fellow prisoners to prison staff. These reports are swiftly investigated and appropriate sanctions handed to sex predators.

Who is at risk of being preyed on?

A number of inmates who have suffered sexual harassment in our jails are from poor homes and or receive little or no family support during their jail terms. Prison ration, which mostly is insufficient, becomes their only means of survival.

The overcrowding rate in our facilities stand at 52.87% with 15,203 prisoners struggling for 9,945 spaces. This gives little room for prison administrators to do a proper classification of inmates to either prevent contamination or limit the exposure of low risk prisoners to hardened ones. First offenders who find themselves in same cells as powerful recidivists are sometimes coerced to trade their bodies for sleeping spaces.

Challenges faced in the area of feeding still exist. The feeding rate of GH 1.80 per prisoner daily has stagnated for close to a decade making it almost impossible to provide three wholesome meals. The quest to keep body and soul together in some circumstances result in poor prisoners kowtowing to the pressures of their rich colleagues. Affluent prisoners in search of sexual gratification sometimes resort to these weaklings as the provision of food and other necessities, sometimes, is more than enough to lure them into same-sex relationships.

Prison staff mostly have difficulty in detecting these relationships since most sex offenders employ coercive and non-violent tactics to win over partners. Additionally, prisoners often underreport overtures for fear of being labeled as informants or becoming subjects of physical abuse.

Are conjugal visits the way to go?

In looking for a solution to the emerging scourge of sexual relationships behind bars, conjugal visits come to mind. The system, which runs in some prisons around the world, permits prisoners to host their spouses in specially built quarters for specific periods. The key to these special quarters, in most cases, is good conduct. Apart from the emotional and physical need of sex that the system presents, prison authorities use it as a bait to enforce prisoner discipline.

Ghana’s prison system in my estimation, is still some miles away from being ripe for such an intervention.

Deficiencies as regards feeding, overcrowding, inadequate reformation and rehabilitation modules and others that the Service currently endures need to be given needed attention as they together possess, though indirectly, an antidote to fighting sex predators.

The fact is, if prisons are not resourced to correct the offending behaviours of prisoners, they are sure to return to haunt society. This confirms the saying of Marquis de Sade, a French author, that “any punishment that does not correct is a piece of gratuitous infamy which makes those who impose it more guilty in the eyes of humanity, a hundred times more guilty than the victim on whom the punishment is inflicted.”

Akufo-Addo declares Monday, August 5, public holiday

A statement signed by Interior Minister, Ambrose Dery, on Wednesday said in view of the day falling on a Sunday, the President, has by Executive Instrument (EI), declared Monday, August 5, as a public holiday “to be observed as such throughout the country.”

The Founders’ Day was instituted by the President by Executive Instrument to commemorate the contributions to the liberation of Ghana from imperialism and colonialism.

It replaced September 21, the birthday of Ghana’s founding president, Kwame Nkrumah, which used to be observed as the commemorative day for Ghana’s liberation and independence fighters.

However, September 21 will be observed as ‘Kwame Nkrumah Memorial Day’.

August 4

On that day, in 1897, the Aborigines Rights Protection Society (ARPS) was formed in Cape Coast.

The Society did a great job to mobilise the chiefs and people to ward off the greedy hands of British imperialism to ensure that control of Ghanaian lands remained in Ghanaian hands.

It represented the first monumental step towards the making of modern Ghana, enabling us to avoid the quagmire of land inheritance that our brothers and sisters in Southern and Eastern Africa continue to suffer, from the seizures of their lands by white minorities

It is, therefore, fitting that we honour them, as those who contributed to the founding of our nation, a statement issued by the Presidency on September 18, 2018, indicated.

The statement signed by Communications Director, Eugene Arhin noted: “The most appropriate way to honour them is to commemorate the day on which the two most significant events in our colonial political history, that led us to independence, occurred – 4th August.”

PDS fiasco: Finance Minister fingered!

Energy expert Kojo Opoku says the blame for the failure of due diligence to be done over the concession agreement between government and Power Distribution Services (PDS) Ghana Limited must be laid at the doorstep of the Minister of Finance and not any other.

He says it took a Qatari company to alert government of the fraudulent documents tendered in by PDS to win the bid.

No due diligence was done, he stressed on 3FM‘s Hot Edition on Wednesday.

Government in a statement on Tuesday suspended the whole agreement after it said further due diligence was conducted.

Fundamental and material breaches were detected with the demand guarantees that enabled PDS to manage the assets of the Electricity Company of Ghana (ECG).

Already, Energy Minister John Peter-Amewu has confirmed the suspension of the official behind the “fraudulent documents”.

Official behind PDS’ ‘fraudulent documents’ suspended – Energy Minister confirms

But speaking on the issue on Hot Edition, Mr Opoku said no official other than the Minister of Finance should lose his or her job.

He argued that what PDS presented were insurance bonds and not payment securities or demand guarantees, as it should be, and this could have been easily detected by an efficient Finance Minister.

“They have to stop this bickering and lies to Ghanaians,” he said about the government’s position on the latest outcome.

“It was a company in Qatar that came to inform Ghana that it was fraud.

“If anybody should lose their job, it should be the Finance Minister.”

Ghana is set to lose $190 million as a result of the latest development.

Government says “full inquiry” has already been launched into the deal to “inform the next course of action”.

Mr Opoku says there should be criminal investigations into the whole deal.

Why government suspended PDS

Government of Ghana in the late hours of Tuesday, July 30 announced the abrogation of the contract with Power Distribution Services barely six months after the company took over from the Electricity Company of Ghana.

In a statement signed by Information Minister Kojo Oppong Nkrumah, it disclosed that “the decision follows the detection of fundamental and material breaches of PDS obligation in the provision of Payment Securities (Demand Guarantees) for the transaction which have been discovered upon further diligence. The Demand Guarantees were key prerequisites for the lease of assets on 1st March 2019 to secure the assets that were transferred to the concessionaire.

It further indicated that steps were underway to unveil the details that went into it as government is conducting a full enquiry into the matter.

Checks by Ghanaweb have also revealed that following the transfer of ECG’s assets and operations to PDS on the 1st of March, 2019, ECG, acting as the beneficiary of the Demand Guarantees, has subjected the Guarantees submitted by PDS to further due diligence tests.

ECG received a letter from Al Koot, dated 16 July 2019 that claims, among other things, that the officer who executed the Guarantees from Al Koot was not authorized and that the Guarantees are null and void. The letter also stated that the officer had committed fraud.

Insider information further revealed that the alarming development resulted in meetings with officials of Ministry of Finance and ECG as well as with President Akufo-Addo.

After the meetings Government decided to crosscheck the information contained in the Disclaimer Letter by sending a Delegation of Stakeholders to Doha, Qatar, on Wednesday, 31st July 2019 to meet with officials from Al Koot.

Remove ‘killer’ taxes – Minority demands

The Minority in Parliament is demanding an immediate reversal in the new taxes announced by the Finance Minister Monday.

Ken Ofori-Atta in his 2019 mid-year budget review proposed an increment in Energy Sector levies and the Communication Service Tax.

Mr Ofori-Atta wants Parliament to approve a GHp 20 per litre for petrol and diesel and GHp 8 per kg for LPG.This pushes the prices of petrol and diesel up by some GHp 90 per gallon.

He also proposed a 3% increment in the Communication Services Tax, from 6% to 9%.

The Minority, who had prior to the budget presentation warned against any such increments, have criticised government for refusing to heed to their caution.

“If these increases (petrol, diesel and LPG) create frustration and Ghanaians wish to vent through phone calls or on social media, the Mid-year budget has made that expensive as well, following the imposition of a 50% increase in the Communication Service Tax from 6% to 9%.

“These measures will send shock waves through many households and businesses as this will only further compound the excruciating hardships Ghanaians are already going through,” Minority Spokesperson on Finance Ato Forson said at a press conference Tuesday.

In his view, the increments will add on to a raft of taxes imposed by President Akufo-Addo despite his promise not to do so in opposition, some of which he claimed to include a 5% backdoor increase in VAT couched as NHIL and GETFund Levies.

Borrowing

The NDC MPs have accused government of “cosmetically” posting a positive primary balance for two consecutive years at a time when the public debt has ballooned.

Mr. Ofori-Atta presented the mid-year budget review in Parliament Monday

Mr Ato Forson is projecting that based on what he describes as government’s appetite for borrowing, the public debt could reach some ¢220 billion by the end of the year, representing 65% of GDP.

“This would mean that in three years, President Akufo-Addo would have added GHS 100 billion to the public debt. We wish to stress that this only represents what has been added since 2017. In all, President Akufo-Addo has borrowed about ¢160 billion (not what is added to the public debt) since 2017 with part of it used for debt reprofiling.

“The public debt would exceed the projected ¢220 billion, once draw-down begins for a number of loans approved by Parliament. This rapid increase in the public debt level means that we have reached a point of debt unsustainability, a fact confirmed by the World Bank Country Director,” he added.

This development, the Ajumako-Enyan-Esiam MP, indicated, is at variance with what the President and his party told the people of Ghana in opposition.

They created the impression that they could govern the country without borrowing and

that even if they borrowed at all, the funds would solely be channeled into capital investments, he said.

“After adding ¢84 billion to the public debt, President Akufo-Addo cannot point to any significant capital investments made over the last three years. Almost all of the borrowed funds have gone into consumption related expenditure.”

For the Minority, the mid-year budget shows clearly the public finance is in a dire state and the resort to additional tax measures is an indication for what they believe are troubling times ahead.

The populist policies adopted by President Akufo-Addo, in their view, have come full cycle and are throwing all the gains made from the fiscal consolidation prior to the coming into office of the NPP government, out of gear.

“It has become obvious that the NPP has no intention of keeping their promises to Ghanaians when it comes to borrowing and the public debt, the imposition taxes, fuel price adjustments and the resolution of the general hardships facing the people.

“The mid-year budget presented by the Finance Minister only offers gloom and portend very difficult times for all Ghanaians. There is, therefore, the need for the Akufo-Addo government to change course or they will plunge the economy into much bigger challenges,” Mr Forson said.

The militia, nomenclature and the silence on sanctions

The militia, nomenclature and the lack of prosecution

The government of Ghana said it felt vindicated when the NMC ruled to sustain the state’s argument that the Joy News documentary Militia in the Heart of the Nation had a misleading advertisement.

The commission claimed the use of a background that showed the worrying activities of militia groups in the country was unethical. Joy News has contested the ruling.But while the government claims vindication, there are questions about sanctions for those who allowed the commander Nana Wireko Addo alias Choman and his team of young men and women to operate at the former seat of government.

In the documentary Joy News established the presence of the group operating illegally at the former seat of government. The state did not contest this, except to say that the people were “a group of young men and women, dressed up in white shirts and black suits, converging at the Castle, Osu, in the belief that jobs will be found for them.”


At a news conference in March this year, Information Minister Kojo Oppong Nkrumah indicated that the leader of the De-Eye Group, Nana Wireko Addo, had been appointed to retrieve some vehicles from appointees of the Mahama administration, finished the job in 2018 but decided to operate his own business from the Castle.

“After the completion of the work of the task force in August 2018, he subsequently converted the office allocated to him into a private business office for the stated purposes of his company,” Mr. Oppong-Nkrumah said. Mr. Oppong Nkrumah said the situation was handled immediately it was discovered.
“But it was quickly dealt with in October 2018 when he was evicted from the premises by a joint operation involving personnel of the National Security Secretariat and the Ghana Police Service,” he said.

But there are questions. Who was sanctioned for the presence of the people at the state facility? The government does not talk about who took responsibility and whether anyone has been sanctioned for allowing an unregistered security company to run from the Osu Castle. Speaking on the Joy News analysis show Newsfile in March this year, private legal practitioner Ace Ankomah said the eviction was not enough. For him, the state should have ensured the arrest of the people.


“Eviction means you can go, go and sin no more. But these guys, on the face of it, are as guilty as sin. But they’re evicted and they have the temerity, impudence, audacity to return to the prime real estate – the old slave fort – and then they have to be re-evicted. You see, the law just does not work in this country,” Mr. Ankomah said.

But this is critical because in the government’s own statement signed and read by Information Minister Kojo Oppong Nkrumah after the broadcast of the documentary there people had no permission to operate at the state facility. He said: “Admittedly, this should not have been allowed to happen in the first place.”

The group also admitted on its website that it was undertaking security training. Their trainers were ex-military men. It’s motto was “Vigilance and Protection”. JoyNews checks revealed that the group had no license to undertake security training or operations, a situation lawyer Ace Ankomah said was criminal.

Former GFA spokesperson Randy Abbey believes someone must take responsibility for the operation of the group at the castle.

“Is anybody being held responsible? So now the focus is on are they militia, do they have a disposition to violence? They’re not. But the truth of the matter is that, look, if you have a situation where there’s a running battle between a group and the national security, and on three occasions the national security is unable to kick them out and that it had to a reinforcement – a joint effort – it cannot be just a group of some idle unemployed young men and women.

But in all this the narrative by the government has been about nomenclature, how the people should be called – vigilante or militia -, but very silent on the prosecution of the group or sanction for whoever was responsible for the occupation of the group at the Castle.

I’m sorry – Prophet Dr. Kofi Oduro begs Ghanaians over tribalistic comments

Prophet Dr. Kofi Oduro, Head Pastor of Alabaster International Ministries has rendered an unqualified apology for the tribalistic comments made during a sermon in his church.

In a post sighted by MyNewsGh.com, the vociferous Man of God and Counsellor stated” my attention has been drawn to a circulating video with an implication of tribalism. I wish to state emphatically that the said video is an excerpt out of a full video that rather speaks against tribalism. I, therefore, issue this rejoinder to retract the mischievous misrepresentation and duly apologize to all”

A video which went viral this week, captured Dr. Kofi Oduro urging President Nana Addo Dankwa Akufo-Addo to fire all his appointees with Ashanti origin for obvious reasons because he suspects they are sabotaging the president.

According to the controversial preacher, President Akufo-Addo is underperforming because all they Ashantis in his government are sabotaging his effort to deliver his mandate to Ghanaians.

“I am with the President and I am to offer Godly counsel, Your Excellency, fire them”, Prophet Dr. Kofi Oduro suggested to President Nana Addo Dankwa Akufo-Addo.

“Ashantis are too tribalistic. They are sabotaging the President because they wanted someone from Ashanti to become NPP flagbearer. They are doing things to make the President fail because of tribalism”, Prophet Dr. Kofi Oduro claimed .He added “Listen carefully! Are you the only people considered humans? Stop being tribalistic and embrace everyone. Now, the Ashanti’s are claiming that they wanted an Ashanti man to be flagbearer and not an Akyem person to lead the country.”

Terkper shares thoughts on 2019 Mid-year Budget Review

DON’T RUSH TO PRAISE ALL OF AFRICA’S “POPULAR” BUT FISCALLY UNSUSTAINABLE PROGRAMS

Introduction

– Context is 2019 Mid-Year Review and the need to be realistic about the fiscal prospects for the country—based on past views in interviews and articles.

– A general call on those who relate to Africa and its leaders not to ingratiate or praise all “popular policies and initiatives”, even if well-meaning, that eventually lead to waste of fiscal and economic resources—even disaster.

– The call goes for domestic leaders (e.g., chiefs, experts, clergy) and foreigners (e.g., multilateral and bilateral institutions, development partners, CSOs, professionals, etc).

Background

– Even the President now concedes (e.g., Oxford University lectures) that the Free Senior High School (F-SHS) will take a lot of resources, including:

– diversion of petroleum revenues from the path of investment to consumption

– including early hints of the use of “Heritage Fund” for F-SHS;

– accumulation of arrears (e.g., pensions, roads, bailouts cost, etc) at May Day Speech;

– higher levels of borrowing than the government had anticipated; and

– despite three (3) (two (2) additional) oil fields with almost 3 times the output since 2017 and recovery of prices that has tripled revenue from petroleum.

– It will involve serious long-term commitment—merit only in leaving a legacy that future leaders will grapple with for decades.

– Note that the Minister for Finance also highlighted the point but was quickly shouted down by hawks within the Cabinet and the Party.

The “unsustainable promise” of F-SHS and other political promises

F-SHS appeared sustainable because—

Unlike the original promise of a “big bang” during elections (starting with all students), SHS program was “staggered” to start with only Year 1 students:

– Years 2 and 3 students continued to pay fees—while program remained “untargeted”, with even middle-class and affluent parents benefitting;

– additional petroleum (oil and gas) revenues provided initial buffer from 2017—but these one-time inflows are against expanding expenditures (F-SHS and other very expensive electoral promises such as 1D1F);

– averting global and SSA recession and investments in energy sector

Ghana among few SSA states to avoid recession

– reverse rate of accumulation of national debt from positive to negative;

– investing directly and supporting private-sector investments in TEN and Sankofa petroleum fields;

– a substantial part of highly-rated fiscal consolidation came through another “illusion”—budget “offsets” rather than a program of paying down arrears;

– bequeath of buffers—previous administration bequeathed buffers:

a. Sinking Fund: use to pay off outstanding balance of Ghana’s first 2007 Sovereign Bond;

b. Ghana Infrastructure Investment Fund (GIIF): balanced used; VAT flow diverted to consumption; and no further allocations made to Fund;

c. Energy Sector Levy (ESLA): continuous flow of Ghc3 billion annually for clearing arrears directed at providing relief for domestic banks;

GDP “rebasing” provided fiscal room and breadth, through

– room for borrowing through GDP growth and “illusionary” lowering of Debt/GDP ratio that is being trumpeted as an achievement by the government; and

– deferred the impact of increasing costs.

– “capping”—has not provided needed fiscal relief, despite diverting vital resources from vulnerable programs (i.e., education {GETFund} and health {NHIL}; rural development {DACF}; and institutions {IGF}

Fiscal signs not favourable—going into Mid-Year

– one-time cushions—the “bump” in GDP growth from rebasing and additional crude/gas production is “one-time” and will no longer cushion the worsening indicators like debt and budget deficit;

arrears owed to contractors and suppliers—large amounts owing to these vital economic players in various sectors, including Presidential initiatives, are becoming apparent and are now acknowledged by the Government—

– pensions—concession at May Day celebrations by HE the President;

– contractors and suppliers—concessions by Roads and Finance ministries and “demonstrations” by contractors;

– salaries—civil servants, nurses, and presidential initiative employees;

– banking sector “bail-out” costs—despite unprecedented funds from ESLA;

F-SHS—no comprehensive disclosure yet to Parliament and the nation on true costs and inevitable arrears;

– increasing tax burden—retention of temporary (“nuisance”) taxes & introduction of new tax measures

– retention of temporary (“nuisance”) taxes such as ESLA, special import levy (SIL), national fiscal stabilization levy (NFSL)

– implicit.increase in ESLA levies:  introduced at a period of low crude prices low US$40s pbl so consumers are paying more now at current higher price above US$60pbl;

Implicit ESLA levy: levy should have lasted 3-to-5 years but increased duration of ESLA Bond to 7-to-10 years;

– new tax measures—increase in top rate of personal income tax (PIT); 2.5 percent increase in VAT rate (from 15% to 17.5%); luxury tax (user fee) on vehicles; blocking VAT input tax credit (ITC);

– discretionary change in basis (valuation and classification) for calculating import duties, VAT, fees/charges; etc;

– fiscal expansion—the worsening fiscal gap may not taper or abate due to

– subtle, not bold, new tax measures (e.g., luxury tax etc.)

– continuing with expenditure programs (likely borrowing, not reallocation to support the pace of president’s electoral promises;

– fiscal deficit and borrowing—these indicators are deteriorating fast and corrections for offsets in, and lowering of estimates, will make these indicators worse;borrowing to support the increasing fiscal deficit;

– borrowing to finance belated infrastructure;

– pledge of resources (e.g., royalties from minerals, bauxite deposits, etc.) to support the budget;

– Sinking Fund—despite three (3) oil fields, not using the SF to reduce debt (as was done from one (1) oil field for the NPPs first 2007 Sovereign Bond;

– Ghana Infrastructure Investment Fund (GIIF)—diverting funds (i.e., VAT and ABFA) for investment in infrastructure to consumption.

Wanted now—cautious voices

“Measured” approach is fiscally prudent—being “measured” with

– F-SHS [e.g., alternative “progressive” approach] and other programs is consistent with fiscal prudence, as elicited in Public Financial Management Act [PFMA] and Budget Responsibility Act [BRA];

– Benefits of being “realistic”—refreshing to hear the voices of caution emerging

– Domestic experts—professors, experts, think tanks, and chairperson of vital constitutional commission have sounded note of caution;

– Opinion leaders—it is important for other domestic opinion leaders to follow a realistic lead (e.g., clergy and chiefs must reflect condition in religious and community schools);

– IMF/WB MD—sounded note of caution, not ringing endorsement, on government expenditure and debt programs; nonetheless

– roll-back of tax measures (e.g., VAT on non-core financial sector and commercial real estate) in Program;

– failing to acknowledge Ghana’s avoidance of recession; permitting fiscal expansion; and not being critical of “offsets” that underestimated arrears and gave impression of accelerated fiscal expansion;

– Development Partners (DPs)—countries that may be capable of free (education) social programs choose to make them “targeted” (i.e., tuition-free programs, as Ghana had) and adopting alternative options (e.g., concessional student loans);

 – Preference for using fiscal support for investments, not consumption, is global

– in advanced countries (e.g., quantitative easing): invest in infrastructure to support private sector and rural/urban development, not place scarce fiscal resources in consumption;

– MIC states—approach adopted by middle-income countries (MICs) such as Emirates and Asian economies;

– Developing countries—Angola and South Africa now showing a preference for infrastructure development through Sovereign Wealth Funds (SWFs) as in Ghana’s PRMA.

Conclusion

– Current fiscal environment is different from late 2014-16 when many SSA countries were headed into recession, due to global financial crisis, fall in crude oil and other commodity prices, and domestic pressures such as non-supply of gas from Nigeria

– Now, three (1) oilfields, not one (1); rebound in commodity prices, and, therefore, enhanced budget buffers.

– Problem is unbridled expenditure due to electoral promises; non-conventional approach to managing arrears; and borrowing

– Time for realistic review and appraisal as well as domestic and international experts toning down their praise or holding back their reservations on Africa’s politically-motivated “popular” but unsustainable electoral and fiscal promises.Source: Ghana|Seth E. Terkper

Give more tax power to local authorities – Dr. Patrick Awuah tells gov’t

Founder of Ashesi University College Dr. Patrick Awuah wants government to pay attention to empowering local authorities to solve problems facing communities.

One way to do this, he said, is to ensure authorities like the Metropolitan, Municipal and District Assemblies are able to raise local taxes enough to address local needs.

He was speaking ahead of an expected increase in taxes as the Finance minister reads the 2019 mid-year budget review. Government could be targetting consumption items with an inelastic demand such as energy and communication.The expected increase brings back another conversation about the efficient use of taxes cutting waste in government and corruption.Speaking on the Joy FM Super Morning Show Monday, the celebrated education innovator Dr. Patrick Awuah observed that those who collect the most taxes are not those who are directly responsible for addressing the needs of the community.

But those who are directly responsible, local authorities, rely heavily on the central government for funds for their communities.

The Ashesi University College founding President faulted this arrangement as ineffective.

“When people feel that they are paying taxes and it is going to be used by some remote government officials for their own ends in a way that doesn’t benefit them directly….that is something every government should pay attention to.”

He said he would vouch for “a system where there is very broad local taxation that is used for local development.”  Dr. Awuah said Ghana needs to design a system that gives local authorities power to raise funds from local taxation.Gha

na runs a unitary system of government that collects and aggregates money at the central government level for distribution through the local government system and the ministries.

The system, while expected to promote uniform development, has been faulted as incapable of addressing local development effectively. There has been an increasing agitation in communities with poor infrastructure with central government often under pressure to fix local concerns.Despite a decentralisation system in Ghana’s constitution, experts say without deeper fiscal decentralisation, local authorities will continue to struggle to solve community problems.

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