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The government has called on Ghanaians to bear with it as it makes what it termed “difficult choices” in an effort to put the economy back on track.

It said it had been confronted with a number of challenges, key among them being the heavy Road Fund debt and debts in the energy sector which required immediate solutions to prevent them from escalating to throw the economy out of gear.

A Deputy Minister of Finance, Mr Ato Forson, made the call in an interview with the Daily Graphic in Accra yesterday, during which he explained the rationale for the increases in taxes on petroleum products which took effect from January 1, this year.
He said, for instance, that “the Road Fund is in arrears of about GHc600 million, while the energy sector debt is about $1.4 billion”.

According to him, those debts had to be fixed now and it would only take hard and difficult decisions by the government to bring the situation under control.

The explanation offered by the government follows public uproar over what some describe as “insensitive increases in petroleum prices”, particularly at a time when the price of crude oil on the international market is falling to record lows.

Ghanaians have already been hit by a heavy rise in utility tariffs by an average of 60 per cent, and just when the dust was settling on that issue, another increase in another sector is announced.

But Mr Forson reiterated that the move by the government was necessary because of the impact of the debts on the economy.

Road Fund debt
“With the Road Fund debt, the amount was a loan of about GLC contracted as far back as 2008 from the Social Security and National Insurance Trust (SSNIT) to undertake a number of road projects,”

Mr Forson said, and noted that it must be paid because it was from pension funds that needed to be reinvested to keep the trust solvent.

He said the remaining GHc300 million was owed to contractors for jobs done but not paid for.

He said the situation was affecting the banking sector and also negatively impacting job creation in the road construction sector of the economy.

He said current road levies were not enough to pay back the loan, hence the need for the hike in taxes to take care of the loan.

He said the Ghana Road Fund needed to be revived to be able to undertake more road projects, including the sealing of potholes which were all over the place to make the roads motorable, while constructing new ones.

“Once the roads are motorable, vehicle owners will reduce their maintenance cost and that will help them make some savings on their disposable incomes,” he noted.

Energy debt
With regard to the energy debt, he said subsidies had, over the years, led to the accumulation of a huge debt that needed to be settled now if the energy challenges were to be fixed.

He said the situation also required an immediate solution to prevent the banking sector from collapse.

“Hitherto, the Volta River Authority (VRA) was a company the banks were all willing to lend to, but today they are all shying away from it because of the huge debt overhang,” he said.

Mr Forson said the size of the debt was such that if care was not taken, it could bring the entire banking sector down on its knees.

He said taxes on petroleum products were some of the few ways to get all and sundry to pay taxes to get the government to fix challenges within the economy.

He cited the Saudi Arabian case where prices of petroleum products had been increased by about 50 per cent because the government required revenue to fix some economic challenges.

He said subsidies and other perks that the citizens received in Saudi Arabia were being cut to get them to help keep the economy on track, adding that the same scenario applied to Ghana.

Transport fares
Reacting to threats by transport owners to increase fares, he said between June and December last year when the prices of petroleum products dropped drastically by up to 37 per cent, fares were maintained.

“So why are they now trying to increase them when the changes in petroleum prices are not even up to the levels they were in the past?” he asked.

According to him, the situation in the country required all to make sacrifices and urged commercial transport owners to refrain from their actions to save commuters the ordeal of paying extra for transport.