Ghana's Atta Mills re-election bid takes IMF hit By FRANCIS KOKUTSE in Accra | Monday, June 4  2012 at  13:59

As Ghana’s President John Evans Atta Mills struggles to douse the fire that the in-fighting within his ruling party that has engulfed his campaign for re-election in December, the International Monetary Fund (IMF) has poured more fuel by asking for a removal of fuel subsidies.

In January, the government was forced by the Trades Union Congress (TUC)  to reverse a decision to remove fuel subsidies. This in itself is a tricky decision because it was President Mills campaign message was to "reduce fuel prices drastically" in 2008.

Therefore, to remove the subsidies leading to increased fuel cost would be suicidal. In addition, it would lead to an already high production cost in the country which has caused inflation to surge to 14.5 per cent.

IMF mission head Christina Daseking said the country needed improve on its policies that should lead to keeping  inflation down to an end-of-year target of 8.5 per cent  with the removal of the subsidies. The fuel subsidies are estimated to cost 60 million Cedis ($33 million).

'Robust growth'

The IMF said after their meetings in Accra that, "with economic growth fuelled by strong domestic demand, policies will need to be tightened to safeguard macro-economic stability and keep inflation within the target band of 5.7-11.7 per cent."

"This should still allow the economy to expand at a robust pace of more than 8 per cent in 2012," it added.

But all is not well with the economy as the local currency, the Ghana Cedi continues to slide against the dollar. The IMF believes the subsidy is only benefitting those in the high income bracket.

This may however not be the case because any increase in the cost of fuel affects the entire population. Food prices go up and transport fares increase thus creating hardships across the country, and President Mills would not like to see this happen in an election year.

Public response to the IMF suggestion has been swift.

Worried

Civil society group, Integrated Social Development Centre (ISODEC) said, it was worried about the IMF position because it was based on a wrong  perception that fuel subsidies benefitted the rich more that the poor.

In a statement. ISODEC said subsidies on fuel offered the opportunity to support various critical sectors of the economy and, in the process, promoted the well being of the citizenry.

"Withdrawal of the subsidy will, therefore, lead to higher fuel prices and undesirable economy-wide effects. It will mean higher transport costs for most workers, higher food prices and higher production costs for the manufacturing sector where boilers are used.”

ISODEC said the government with its huge fleet of vehicles coupled with an increased number of government appointees, including ministers, deputy ministers and special assistants, the major consumer of fuel was not the ordinary citizens.

"A withdrawal of fuel subsidies would have a knock-on effect on the government’s budget and the domestic debt".

It cautioned the government that, “it may seem a measure to fulfil a prior IMF commitment and if the government goes ahead... it will a high political cost.”

It is also becoming clear that the fuel is not the only issue that has haunted the President recently.

Challenge leader

His former minister of justice and attorney general, Mr Martin Amidu,  whom an official statement claimed was sacked for showing disrespect to the President in April,  has come out to openly challenge the President Mills to make public the truth or he would spill the beans on what led to him to leave government.

Mr Amidu came out with a second statement last month  after he had used an earlier one to accuse President Mills of inciting the public against the judiciary.

This followed a Supreme Court order that cabinet decided to over-rule  in a case concerning  the sale of  a state bungalow to  a former minister who served under President John Kufuor. Two deputy ministers under the present regime went  to the Supreme Court to annul the sale of the property.

After Mr Amidu's statement, some members of the government communication team went on radio to say he had become disgruntled after leaving office and was being used by the opposition New Patriotic Party (NPP).

In response, he said, “several happenings in the present government made me to realise that honest and sincere criticisms have the appearance of being accepted only for schemes and plans to destroy the integrity of the critic to be hatched.”

It looks like Mr Amidu may not have the chance to go public as a former Chief of Staff under the Rawlings administration, Nana Ato Dadzie,  has waded into the fray and called for a truce between the party and Mr Amidu.

Nana  “He (Mr Amidu) has been a senior government member and I hope that this matter would be brought to an end. I have had some 17 minutes chat with him and I think that he’s an NDC member true to the core and the party leadership must really call a truce to bring this matter to a closure.”

Perhaps, Mr Amidu might heed the call and give President Mills some respite to concentrate on how to solve the other problems facing him in order to tackle the opposition which is enjoying all that has plagued the ruling party’s campaign so far.