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Ghana Government to Begin Cuts in Spending


Ghana's government says it is cutting into half spending on what it describes as luxuries after the economy faced serious challenges over escalating oil and food prices. The government says it is doing all it can to manage the economy after President John Kufuor recently said the country's oil import bill had leapt from $500 million in 2005 to $2.1 billion at the end of last year. The government, however, adds that its investment in infrastructure, such as road construction, would not be hit by the cuts. But some political analysts say the government's difficulty in managing the economy could potentially undermine this year's general elections, with budget cuts to the electoral commission.

Kwaku Kwarteng is the government's spokesman on finance. From the capital, Accra he tells reporter Peter Clottey that the budgetary allocation for the elections would not be tampered with.

"That action is necessary, but I have to point out first and foremost that they are not luxuries per se. What they are, are what we call non-development capital expenditure. That is to say investments into capital that is not related to the development programs of government would have to be suspended for now. And here you are talking about, take for instance, the air conditioners in offices, carpets that are old and need to be replaced, and other such items that capital expenditures, but not directly related to development programs," Kwarteng pointed out.

He denied the government budget has been thrown off balance, but adds that there were challenges due to increases in oil and food prices on the international market.

"Well it depends on what you call throwing something off course. We recognize that the management of the economy is not a child's enterprise, and that these things are bound to happen in one way or the other, and it is the responsibility of government, into whose hands the economy has been entrusted, to find solutions to them. But of course a certain shock has come from the external environment that was not factored into the budget at the time of the preparation," he said.

Kwarteng said the government is doing everything possible to assuage the impact of the external shock the budget is undergoing.

"We didn't anticipate the crude oil prices would go this high and so as a result we have to manage the economy to respond to this external shock. I don't say the budget has been thrown out of gear because so long as we are able to manage this difficulty, that directs investments in such a way that the improvements of people's lives are not affected. I will consider it would not be a crisis situation as throwing of a budget off gear would suggest," Kwarteng noted.

He said the government would ensure that the budgetary allocation for the electoral commission would not be tampered with to ensure a free and fair election.

"The fact is in an election year we all recognize how important the election is in our democratic culture. And we are not in a position to say with difficulties coming from external environment, we do not have the money for the elections. It could throw this country into a lot of social difficulties, and the cost of which would far outweigh the money we are trying to save. So, areas such as in the elections, security in an election year, and all the areas we call good governance areas -- these are areas we would definitely not disturb. And that is why we are saying we are going to look at areas which are not of critical urgency around this time so that we would be able to protect investments into areas of critical urgency such as our electoral process," he said.

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