[Music] and thank you very much for joining us here on PM Express today is a big day a big day indeed for the John drani mahama Administration it is the administration's first budget day and they put out their economic policy and this is on the back of last year's campaign for elections they wanton it but they want it with a blueprint their Manifesto and they told us a few things that they wanted to do if they win based on that social contract you voted for them this is a first opportunity to see if they really have what it takes to implement all the promises that they make to us and so the Finance Minister Dr Cas foring went to Parliament today and put before the house and our Representatives the economic policy and we're beginning to learn a few things one thing that jumps out is that the government is desperate in a hurry to fulfill those key promises and lot of the big ticket items they have found a way to fund it and they are not only funding it but they also cutting nuisance taxes and that many are beginning to ask the question how is a government able to cut taxes but also spend to make your life better and put more money in your pocket but at the same time plug the gaps that will emerge when they cut the taxes somehow Dr k for put put before Parliament today a master plan that cuts taxes puts more social programs at play that benefits you but also somehow he showed us Illustrated it um by cutting elsewhere readjusting funds that I didn't even know existed doing a study in one case over 8 years looking at how we how much we're spending from that account and using part of that to fix part of the holes that'll be left if you check Twitter there's a conversation happening there and I saw it tonight my colleagues Drew my attention to it and people are now calling this autonomics whatever that is we'll get to find out tonight the man himself is here with me he is the Finance Minister Dr K foring thank you very much thank I'm grateful that you can join me thanks for having me and what you didn't know is that a man before he became Finance Minister was a an expert a think tank person so don't be surprised that we standing in front of a touch screen because what you heard in Parliament is great but it's good to see it it's good to see it and then he can talk us through what he has done and that's what we're going to do this and I'm grateful that you you accepted to do that thank so two two part two segments tonight we'll do breaking down the specifics and then we'll sit down for a conversation where I can ask him a few more questions on your behalf um so we can get a bit more grer detail questions like when can we see these beginning to reflect in your pocket if they've taken away the taxes when do you expect that when you send money to your mother mother you no longer going to pay that eev on it that will be extra money either in your mom's pocket or in your pocket I want to get that detail for you so stay with me for that second half of the show we have 1 hour 30 minutes for this and so we can get a bit more time with the Finance Minister and I want to go straight to it and you start to today by giving us a sense of how you came by this document the content exactly and you give us three different sources of ideas for you if you want to walk us through that so first we engage the National Economic dialogue and it was um let me say master class we were privileged to have a chairman who is an industrial person very experienced person and he took us through a very important dialogue the participation was apolitical it was very nationalistic in nature and outcome was very quite encouraging to my surprise the very con conerns that I had were the very concerns that the vast majority of the breakout sessions came out with so there was some convenance largely it has to do with fiscal discipline the way and manner we have destroyed ourselves as a country so I took that into consideration in preparing the budget aside that I engaged traders in major trading centers and and this was unprecedented because I'm yet to see might since I became politically aware the Finance Minister who then decides to go to the market he didn't just go to the market they're very upskill man could have gone to Acra M for example but you went to Mo of places but you know what Evans the best Economist in this country a largely maret woman okay they've tested it they've tried it they successful the best Economist that you can ever see what was the thinking behind it and so that's what you're watching there on your screen that's the Finance Minister interacting with a market woman in a shop uh and this is mola for those of you who haven't seen it I'm just curious to know what what informed the strategy going to the market talking to largely there were series of conversation around government and the conversation had to do with are we addressing the needs of the people and his Excellency the president said engage further so the first thing that came to to mind was if I'm going to engage I have to engage practitioners not for only tank towns and high level people but I need to go down and I decided to visit the makola market to my surprise something came out very strong almost every single person that I met most of them are women they said look the problem of Ghana today has to do with exchange r it and if you can stabilize the city for us we'll be also be a we'll also be able to hold prices and I I I saw a situation that really touched me a lady that I met in a shop as soon as she saw me she started smiling and I said how are you said yes I'm fine and she went on so I asked her where is she coming from she say I'm coming from taso and to my amazement the lady said I was in this shop 3 weeks ago as a warehouse and I buy um cooking utensils and resell in my hometown and today I came back last week I bought it for about 1,350 I think she said 1,350 that 1350 within 3 weeks the price has CH has changed from 1,350 to approximately 1,750 I saw that I really shocked you actually exclaimed I said wow you don't mean it within 3 weeks so ask I I put her in back to the shop and I asked the shop owner what exactly is going on on what exactly going on here the shop owner said to me that because of the volatilities we see in the exchange rate they also have to hedge and in hedging they increase their price forward looking at probably what may happen in the next couple of days so I assured him that based on the structures we are putting in place prices of goods and services is not going to go down go up on the back of the exchange at that much I said okay if you can signal to us that that's what is going to happen we also hold our prices so for me it was an eye opener and in fact if I get opportunity I'll go back to the market and the the the kind of information I had in the market is economics Made Simple it's more than economics and you we'll see how that then translates into some of the policies that put out there cuz I kept I hear you emphasizing the point about the people um and how you and there's a very clear distinction in what you're doing what I see in the budget today one line one tax item that you introduce is on the big players in the mining sector exactly when it comes to the Ordinary People everything else is about scrapping taxes even the V8 reforms I saw today you were actually thinking about households the focus is on households households I Saw hous V is a consumption tax yeah and the incident falls on you the consumer businesses will get input V and they will be able to offset but as for household the incidence is directly on you and that is the main reason why we of the view that where vat is today we need to reform it and reform it in such a way to give relief to the ordinary ghanian the household and we say this because if you look at Africa today the G Ghana is the only country with a effective V8 rate of about 21.9% so effective most countries about effective 22% most countries are I think the second highest is Morocco with about 20% so clearly there's a problem with the vat not only that the vat rate itself has been distorted um you can see some cascading element you can see the Distortion where sales tax has been mixed with value added tax where there are some flat rate there's a standard rate and many other uh distortions so we think this year we should spend some good time to engage properly and review the value at the we'll come interrogate those um a bit and there's another one is to the youth and we saw that on X where you engage the young people more than 60,000 people at some point watched you and this was all before The Bu and all that fed into that I've seen a few initiatives in there trying to address the that brackets exactly and and the kind of knowledge and the participation that came from the youth was amazing I I had something to my amazement that a group of Pharmacists over 300 of them were employed in June 2022 2023 and from June 2023 to date they've not been paid I was surprised I was very active um I mean in the economy since last um since many years ago but I've never heard this so when I heard it I was really surprised that what is going on here so I commit to resolve so that's that's how where you get it from um in terms of the specific F then we look at the fiscal discipline and I noticed that at the economic dialogue uh drams kept emphasizing that point about of the matter discipline you put out a few things today and we see it on your screens here where you say you want to enforce sanctions on the pfm ACT sanctions could mean that you're going to be sanctioning some of your own colleagues but even in cabinet you have the balls to the EV Evans first of all let's call a sped a sped the public financial management act has not been implemented at to should be the ACT is a gold star in fact it is one of the best you can get in the world I don't think you can count first 20 countries with very strong robust pfm regime better than that of Ghana but the truth remains that Ghana has unable to implement the Val pfm act the previous administration virtually did not implement the pfm ACT we do not need new laws all what we need to do is to implement the pfm act and to implement it successfully you need to apply the sanctions and the sanctions may not only be looking forward it has to look at those who have infringed upon the pfm act in the past in the past so you have to look back and look forward so that at the minimum those in office today will also know that what has happened to the person who infringed upon the pfm ACT may happen to you to be clear so the country will not go down this will apply to officers in the previous admin of course of course it's a pfm act and if the inra if you have I mean if the infractions were so severe to the extent that has affected the economy of Ghana and people are paying a huge price of it and of course the Attorney General must act on that so this is something that you are going to be looking into or you have the Attorney General set up a team to probe and find out who has violating this so so first of all we've begun a process to validate some claims at the Ministry of Finance we inherited huge arrests and huge commitment arrest in excess of 67 billion Ghana cities 67 billion I I want to go there because and we talking about the state of the economy as you met it now and this is what you presented 67 billion Ghana cities so are you talking about yes that's it that's it so we inherited this 67.5 billion Ghana cities representing 5.2% of GDP but it surprise you to not that this 67.5 billion Ghana cities over 80% of this amount the they I mean the contract was awarded without commencement certificate so this is government contractors and suppliers government contractors and suppliers you see and of this 47 67.5 billion cities we have 18 billion cities Plus as sitting at the controller and accountant General being payment that has been processed and waiting for payment because the ministry of the Minister of Finance then had signed and it's sitting at the Min controll why though why is he sitting if it's well it's sitting at the controll accountant General because there's no cash to pay okay there's not cash to pay so whoever was today so they just signed it but there was no cash available they didn't know at the time they were sign there was no cash well um I would not be able to make that statement but the Tres they knew that they had exceeded their ceilings for the year but they still process and 18.2 billion Ghana cities is sitting at the control accountant General today as I speak with you then we have another 49.2 billion Ghana cities also sitting at various MDS being work done waiting for payment to the controll accountant General and obviously to Bank of Ghana for for for for payment so the two put together will give you 67.5 B ion Ghana cities being outstanding claims that the government of Ghana had to pay the first question is do we have the money to pay that now I guess the question that the Finance Minister is the only person who can answer do we have the money of course well I don't think we have enough 67.5 billion to pay now because this contracts were awarded without budget to without allotment and we do not have the space to accommodate them we should provision for them but before you make provision and before you start paying the first thing you need to do is to validate it in the budget I've made provision for some 13 billion CS to start paying down while you validate even before I I I pay I need to ensure that this matter this amount is legitimate and to assess the legitimacy of the amount we will need to bring on board the auditor general so I've reach out to the auditor general I've asked him to commission an audit and validate the amount and advice before we can that P and and ultimately you say that the Attorney General may have to get involved in PR we need to um it is his decision to make that St I mean it's but you pull the evidence before him if you find the question is we have to first of all identify the infractions if we identifi infractions we have to submit that to the attorney general for advice it is for the Attorney General to make that advice let's bring this now a bit more because and again this is talking about what you met these are huge numbers when it comes to some of the but EV agencies it's not only the arrest the problem we have is more than the arrest okay we have again contract that has been awarded and active about 194 billion Ghana cities contracts 194 194 billion Ghana cities contract that has been awarded across the economy that the Ministry of Finance one way or the other if they are to perform will have to pay but you see the contract is What flows into the ipcs because when the person works then the state will have to make a location to pay but if you don't have money why do you award that those contracts 194 billion almost $200 billion as cities 200 billion cities and that is different from the 67.5 billion Ghana cities so we you're not sure yet if those contracts have been executed or have been executed yes um from the first job that way did the feedback we had is that some of them are at site working and some have also some of them are suppliers so they have to supply and they in the process to supply and so I've said that I want to validate once again and to find out whether they have the authorization to commit government to that extent and if they don't have authorization we ask them to stop because in the meantime are you asking them to pause whilst you look um yes we have already communicated that they should pause you look because we need to find out as to whether they have authorization to commit that Quantum 194 billion Ghana cities and as to whether the budget can accommodate 194 billion for example if they are able to produce ipcs worth 100 billion CS can the budget accommodate it the answer is certainly no not accommodate it and then you talk about now you're giving us the numbers when it comes to ECG and and others yes and now we know from what you've said today in Parliament that ECG 68 billion CS being amount that they owe they've awarded so much contract also some of the items according to the minister responsible for energy and green transition he has informed us that ECG has awarded contracts and they have actually got people to supply them things they would not need for the next 10 years and some of the things that they would not need for the next 10 years the expiry date will be the next 5 years and the question is can we continue like that as a country 68 68 billion cities but that is not all they owe ipps another 1.73 billion us because of ccg collect yes they collect and they have to pay the ipps and if you collect and you use the money to award contract and spend the money ahead of your original obligation then the question is they're transferring this IP's obligation to the you said today you're negotiating this yes we have to the previous government started something yes they make some savings there the rendition I I I don't think they signed them or got it through Parliament Parliament have not approved that um what we seek to do at the moment is to complete that process and we believe we can make some strong savings but we we'll begin the negotiations Coco board you mentioned Coco it's another elephant huge one 32 billion yes is what they 32 billion Ghana cities owned by Ghana Coco board and of this 32 billion the old Coco Roots alone about 20 billion Ghana cities and then you're talking about the Coco Road exactly what you talking about that's 5.7 billion this one is Road fund Road fund the road fund yes Road fund Road fund also owe contractors approximately 6 billion GH cities and this is the thing that surprised me B is asking for a bailout yes 53 billion C for what you say for to deal with a negative equity and this is on the back of the report show that the 60 billion whole you remember um in my previous life as the minority leader I kept saying that bank of Ghana had generated so much debt so much um I mean deficit as a result their balance sheet is not healthy and that um they have generated negative equity apparently the previous administration in the Bank of Ghana had signed anou for the government of Ghana or the taxpayer to capitalize the central bank with 53 billion Ghana cities do you have the money um I've asked the bank of Ghana to look within and cut expenditure because the taxpayer cannot afford 53 billion I've committed I've communicated that to the government but you already have an agreement with government um but but they can look within they can look with within first of all they have to look within you know you've seen their new head office very big building they have a choice a choice to sell and Lease back if they want to they have to look within and cut expenditure and reduce events the taxpayer cannot afford 53 billion Ghana cities given 53 billion Ghana cities to the central bank will simply mean that we will have to deny the taxpayer some public good like roads like um schools like hospitals is that what we want can we afford it at this stage the question is no the answer is no we cannot be able to afford that and so the Central Bank must look within they have hotels like guest house and others why are they in guest house can they sell some of them and use the money to recapitalize the taxpayer cannot be used as a punch back so I've said to them they should look within L luckily for me the governor is on board and I expect the governor to look within and cut expenditure to reflect the needs of the bank if they if they come to you with you know their share of the bargain would you me them halfway or you want them to the Cal Bank find all 53 billion the central bank is able to come to me with a reasonable offer um we can have a conversation okay but it must start from them and I have also said that they may also have to consider plowing back their profit over the next 10 years to recapitalize it that can also be done it depends but what would the implication if they don't do this quickly can they survive it is not a problem the bank can survive see first of all what they need to do is to as soon as possible generate enough cash cash to be able to run the Affairs of the bank which I believe they are doing that all over the world you've seen some central banks that have survived with negative equity yeah it's not it's not out of order they can be they can do that um and of course there are many stall projects uh as a result of everything you've talked about a few of them you told us number of projects 55 5.63 billion commitment on projects right you talk about 2.67 billion less disbursement and on disb is talking about 2.95 billion and this includes pending ipcs with lenders of you know significant amounts of money all right Evans you recall that as part of the debt restructuring the previous government engaged all bilateral creditors and said that we can pay our debt any longer and as a result dis basement stalled and we have 55 project DED across the country you've seen the one um on your way to TMA through the central un FL Road see the one from T also going all the way to um aimoku you've seen the T um the one that the Chinese company is doing if you go to Taka you see the taka Market Circle you see the F Hospital you see the if you go to Kumi you see the K Hospital you see Kumasi outer um Kumasi inner city roads and you can also remember this famous um um this Market K market and many others they are 55 in number and it's scattered across the country as we speak we have undispersed amount approximately 3 billion Ghana cities US dollar 3 billion us and we also have $300,000 us being ipcs that are outstanding aside that because of the demobilization cost and remobilization delayed payment we anticipate that an average of $ 1.1 billion US will ACR to the state as a result of demobilization cost and cost overruns so that is a big situation but you see the problem is not even the project the problem is the fact that if care is not taken this project may not be completed anytime soon I think what I've said is even an it's an understatement if you look at the next graph you will notice that the IMF has access the IMF has access to uh or IMF has placed a limit of 250 million us on all dispersement after the dispersement resumes when we we signed the mou we are now going to initiate the individual bilateral agreement after that you can only draw down $250 million this means that all the projects you see around the country that are stored you will need 12 good years to be able to complete it 12 years but I'm saying that that would not be a better way to manage public funds so what are you going to do about it so what we're going to do in the coming days we'll put on the Ghana hat and prioritize this project we'll pick first five for first eight and ensure that the next four years we'll be able to finish it other otherwise if we spread ourselves so th the next four years we have nothing to show and some of the projects are 0% some 10% some 90% but why don't you concentrate and finish those at 90% 80% 70% and allow or agree to uh uh not to continue the ones that are about 10% or 5% so these are some of the things that we can consider and I want to quickly as we wrap up before we sit down for a a bigger conversation on some of the key issues some of the big ticket items and I know many of you are getting home right now and wondering did they keep their promise to scrap the taxes because that directly impacts your pocket yes they did and a whole host of them five of them so we have 10% withholding tax on winnings that's the famous beton tax is gone you have the electronic tax eevy all right is gone you have the missions Levy is gone you have the vat on Moto vehicle insurance policy is gone as well and then you have 1.5 withholding tax on winnings of unprocessed Gold by small scale miners also gone all of this and the key question we've been asking you since you put this out in the manifesto was how are you going to make up for the revenue shortfall you told us something today many economists have said I'm just quoting Professor bman who I spoke to on news night on my radio program says it is unprecedented and he he he rarely comments any Gap but he he did commend you how did you manage to PLU this Gap okay Evans I think um going into the ministry I recall that in 2016 on behalf of my former boss the set we sent a bill to Parliament called the revenue Administration act and as part of that that act we had proposed to Parliament to impose 6% of all revenue to be set aside for the purposes of tax refund 6% and then we left office in 2016 so 2017 to date the 6% had accumulated in total about 32 billion 26 billion cities this 26 billion I asked the J and the Ministry of Finance to give me a breakdown of how this taxes and tax refund account has been used to my surprise only and I mean only 43% of the resources that accumulated into that account was used for the purposes that it was supposed to be used for and the purpose then was purp was to refund taxes so if you've paid your tax and it's established to an audit you will refund exactly like you know because of the nature and structure of the vat for example there are times that you overpay and then the tax Authority will have to make sure that they refound you to encourage you to make also pay your taxes even 43% was used largely to for tax refound so I said are you sure can you give me an analysis as to whether they have accumulated some arrests and they are not paying to my surprise once again and once again there was no arrest and so largely less than 50% of the tax refound amount has been used for the purposes of tax refound then I came out to ask them a question can you tabulate for me year in year out in the last 8 years how they have applied the 57% to my surprise once again the money was largely misapplied and used for things that were not supposed to be used you understand and I said this practice cannot continue and so we are going to put a stop and to put a stop we said okay to start with we'll take 2% of the 6% and bring it down to 4% that 2% this year alone is giving me 3.8 billion cities and so 3.8 billion cities I looked at what what are the taxes that we can scrap El I may I will lose 1.9 bil so I'll take 1.9 billion from the 3.8 then I said what about bet in tax from the implementation so far if I remove it I will lose 180 million so the two put together is about 2.1 billion so 2.1 minus 3.8 I still have 1.7 billion cities left and that 1.7 billion cities I decided to give it to society the ordinary Gan give it to society the ordinary Gan and who day assembly men were given 100 million cities we gave some money 499.99 billion is enough to take care of social basic social needs of the ordinary G and so that that was something simple that we could do and I think the way and manner that account had been misuse we need to look into it we definitely have to look into it because this is against the pfm act and it's against the enabling act the revenue Administration act itself and the way and manner that account has been abused and raped over the last 8 years is very regrettable and by the way I'm going to be interrogating that a bit more because there a few more questions there that need to be unpacked we're going to take a break when I return we'll take a seat then I get to ask him the hard questions on your behalf now you understand what he's done he's now told us also how they got a money to give out a bit more to some of the key policies they promised to do 100 million to the women banking something that it's also something you put money into paying assembly men is something that you promise that you you're also going to commit it but he's not telling us how they found the money but let's interrogate it a bit more when we for a conversation want to stay with us uh Dr King the Finance Minister is my guest here on PM Express we're going to be breaking down this a bit more with some of your questions that have come in a few of my own also um let's understand this a bit more but let's get him also to ask answer some of the key questions you have including what the former government has been saying now on the back of the budget that some of the tax handles that they've abolished they actually never implemented um and so the point is how can you abolish something that was never implemented um we will deal with that when we return from this break e