[ 2015-03-25 ]

Bawumia: Infrastructural investment declining under Mahama
The 2016 Vice Presidential nominee of the main
opposition New Patriotic Party (NPP) Dr. Mahamudu
Bawumia has stated that investment in social
infrastructure in the country is declining under
the Mahama led administration.

According to him, contrary to claims by the
government that more capital investment is being
made into infrastructural development such as
roads and schools, the reality on the ground
suggests the opposite.

“Contrary to all the government claims of an
increase in infrastructure expenditure on projects
all over the country, the reality is that
Ghana’s expenditure on infrastructure is
declining. The numbers indicate that relative to
GDP, this government is investing about half what
the previous government invested in
infrastructure.

"It is in fact a travesty that Ghana before the
discovery of oil was spending a higher proportion
of its income on infrastructure investment than
after the discovery of oil and the massive
increase in the debt stock.

“The 2015 budget shows an economy in decline.
Real GDP growth has declined from 15% in 2011
(with the onset of oil production to a projected
3.5% in 2015 (including oil).

“The decline in economic growth is reflected
across all sectors (Agriculture, Industry and
Services). The 2015 budget is projecting non-oil
growth of 2.7% in 2015. These facts are as
revealing as they are disturbing. The growth rate
in 2015 would be just about what it was in the
year 2000 and half the rate of the 8.4% achieved
in 2008 without oil! Non-oil growth in 2015 will
be below the growth rates attained in 2000.

“This decline in investment in infrastructure
runs counter to what one would have expected. Even
though the allocation of oil revenues is skewed
towards infrastructure, the decline in capital
spending means that the infrastructure expenditure
from oil revenues is substituting for rather than
adding to existing capital expenditure," he stated
as a Visiting Professor of Economic Governance at
the Central University College, Tuesday.

"After all the loans, all the taxes and all the
oil, how can investment in infrastructure relative
to GDP be at half the level that it was in 2008
(without oil)? This means that if the government
had just maintained the 2001-2008 levels, it would
be doing twice as much as it is doing now in the
areas of roads, water, energy, etc.

"The sad decline in infrastructure investment
partly explains why GDP growth has declined
significantly from 15% in 2011 to a projected 3.5%
in 2015," the former deputy governor of the
Central bank stated at the 4th Distinguished
Speaker Series lecture organized by the University
under the theme: “The IMF Bailout, Will the
Anchor Hold”.

Dr. Bawumia explained that the decline in
infrastructure spending has partly accounted for
the significant decline in GDP growth, which had
invariably contributed to the economic malaise the
country finds itself in and for which an IMF
bailout is needed.

“Mr. Chairman, what is surprising about the
current state of public finances is that over the
last six years, this government has had available
to it more financial resources than any government
in the history of Ghana and so unlike previously,
the current predicament cannot be blamed on a
shortfall in resource inflows. The financial
resources that have been available to this
government are actually mind boggling.

“In the eight years between 2001 and 2008, the
total tax revenue collected was GHC 15.2 billion.
In contrast, the government has collected a total
of GHC 62 billion in the last six years
(2009-2014) in taxes. In the last six years,
Ghana’s total debt has increased from GHC9.5
billion in 2008 to GHC76.1 billion at the end of
2014.

“Ghana’s gold exports between 2001 and 2008
amounted to $9.0 billion dollars. Between 2009 and
2014, total gold exports have amounted to $25
billion dollars. Government has therefore earned
significantly more from the revenues associated
with these exports in the last six years.

"Ghana’s cocoa exports between 2001 and 2008
amounted to $7.4 billion dollars. Between 2009 and
2014, total cocoa exports have amounted to $14.5
billion dollars. Government has similarly earned
significantly more from the revenues associated
with these exports in the last six years.

“Ghana has also become an oil exporter during
the period of the NDC government. Ghana has
exported $13.7 billion of oil in the last four
years and has earned some $3 billion from oil
during this period. There were no oil revenues
accruing from oil exports during the 2001-2008
period or for that matter in any period of
Ghana’s history".

Source - Starrfmonline

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