The Minister of Finance has confirmed what Foroyaa has been alluding to since the beginning of the unseasonal rains.
The Minister said Gross Domestic Product (GDP) for 2014 is estimated at 2 percent compared to 4.6 percent in 2013. According to him, this is due to the decline in tourism and agriculture which he identified as two leading drivers of economic growth.
According to him, “tourist arrivals for the 2014/2015 winter season have declined by 60 percent.” The domestic debt of the country is growing in the face of growing expenditure without a proportionate growth in revenue generation. The contraction of the economy is having far reaching effect on foreign exchange earnings and income generation. Hence the dalasi has been declining in value. According to the Minister by the end of September 2014 the dalasi depreciated against the dollar by 23.5 percent; 17. 8 percent against the Euro, and 22.1 percent against the pound sterling.
In the face of an increase in the budget amounting to 11.7 billion dalasis as projected expenditure for 2015, it is important for the public to know how the revenue would be raised.
Domestic borrowing is supposed to be reduced and the climate for grants is being polluted by incomprehensible rigidity on governance issues.
Hence, the government would only try to cope by increasing or expanding the tax base or reduce the expenditure on services or both.
It is therefore no surprise that the levy on mobile phone companies has increased by a hundred percent, that is; from 1.25 percent to 2.5 percent which is expected to yield 33 Million dalasis . A fuel levy of 1 dalasis per litre is to be introduced which is expected to yield a sum of 88 Million dalasi. There will also be 35 percent levy on imported poultry product. This is expected to yield 15 Million dalasis. Import levies on Premix oil is to be increased from 4.76 dalasis per litre to 11.42 dalasis per litre which is expected to yield 60 Million dalasis.
Excise tax on cigarettes is to be increased from 9 dalasis per packet to 12 dalasis per packet while excise tax on other tobacco products is increased from 150 dalasis per kilogram to 200 dalasis per kilogram. Environmental tax on cigarettes and other tobacco products increased to 2.20 dalasis per packet and 110 dalasis per kilogram, respectively.
All these taxes and levies would be passed on to the consumers.
Only a government with the political will to undertake electoral, constitutional, institutional and administrative reforms could attract an increase in grants in the face of a declining economy which is so badly in need of budgetary, infrastructural and institutional support.
The choices taken by the government would determine whether it would be afloat or sink deeper into economic crisis. The future will tell.