Kojo Oppong Nkrumah has cautioned against deviating from established figures, warning that relying on manufactured numbers or unverified claims could misrepresent the true financial situation.
Addressing concerns on expenditure management, Nkrumah explained that a cross-party agreement exists on a fiscal consolidation strategy. He recalled the New Patriotic Party’s (NPP) manifesto commitment to remove three specific taxes, explaining why they were not cut immediately. “The budget had already been programmed for 2024. It is when we build a new fiscal framework for 2025 that we can take those taxes off.”
He noted that even with a new administration in place, the taxes remain because of prior financial commitments. Kojo Oppong Nkrumah outlined the importance of balancing tax cuts with expenditure reduction to prevent economic instability. “We programmed that we were going to cut expenditure by about 3% of GDP. Looking at GDP estimates for 2024, 1% of GDP was about 10 billion. So 3% of GDP is about 30 billion.”
He explained that while revenue cuts would amount to about 7 billion, the 30 billion reduction in expenditure would create a net positive balance for the economy. He criticized the opposition for making political gains out of tax cuts without a clear plan for compensatory spending reductions.
Wasteful Expenditure Debate
On the issue of wasteful expenditure, Kojo Oppong Nkrumah emphasized that subjective interpretations should not drive fiscal policy. He cited the KPMG pre-budget report, which advised the government to move beyond vague references to wasteful spending. “What KPMG, for example, advises the government to do is to be definite in a cut.”
He stressed the need for concrete action rather than rhetoric. “Dr. Bawumia was clear that we’re going to cut 3% of GDP. And so you can measure it and see it in the numbers.”
He urged a thorough analysis of expenditure figures rather than focusing on symbolic reductions. “If, for example, I have 80 ministers and it’s costing 100 million to run government machinery, and you have 60 ministers, and it’s costing 120 million, the numbers are exposing the fact that in rhetoric, you’ve told us you’ve reduced, but in terms of the cost… it’s gone up.”
Revenue Strategy and VAT Adjustments
Discussing the government’s revenue approach, Kojo Oppong Nkrumah expressed skepticism about plans to restructure the VAT system. “That is code language for they are going to introduce VAT on new areas.”
He explained that rather than creating entirely new taxes, the government might expand VAT coverage or increase existing rates. “Something that was 1%, they will move it to 3%. Something that did not affect, or VAT that didn’t affect a particular category of services, they will add it to it.”
Nkrumah cautioned that such measures could result in excessive taxation of productive sectors. He cited financial services as an example, where previous VAT impositions constrained growth. “If you reintroduce it, what you are doing is that you are reneging on your promise to reduce the levels of taxation.”
Nkrumah called for adherence to the agreed fiscal strategy. “We agreed we would cut the taxes. Cut them. Of course, it will have a 6 to 7 billion implication on the expenditures but cut those expenses. Don’t do what they call rationalization. Cut it.”
He stressed that the government’s initial goodwill period is the best time for decisive economic actions. He said without doing that people start getting disappointed because their expectations have not been fulfilled, this then makes it difficult to master the political will to make the tough decisions.
