October 7, 2016 By Mohamed Massaquoi
The former secretary general for the opposition Sierra Leone People’s Party (SLPP) has said without mincing words that the ruling All People’s Congress (APC) administration’s reckless management of the country’s economy is the reason for current economic downturn which has prompted the latter to announce austerity measures, adding that such has the potential of creating more problems for the average Sierra Leonean.
Jacob Jusu Saffa, while reading a press statement at the SLPP headquarters in Freetown, on behalf of the opposition party, on the current economic state of affairs in the country, said his party holds the view that the slowdown itself was largely caused by the lack of vision on the part of the leadership of the country, which he accused of quickly shifting the blame on the outbreak of the Ebola Virus Disease and halt in iron ore mining.
The firebrand former scribe of the opposition party noted that whilst the SLPP recognises the economic impact of the EVD, it was deceitful for government to solely blame current economic meltdown on tan outbreak which ended over a year ago, arguing on the contrary that reckless public spending and corruption were to blame.
He said the poor management of mining contracts caused the premature collapse of key mining firms, African Minerals and London Mining, with far reaching implications for revenue, employment and national income, adding that only governments of yesteryears could rely on mining as main source of revenue and national output.
“Following the global economic turmoil in 2008 and 2009, through one of its press releases, in 2008, the SLPP advised this government to diversify the economy and reduce its reliance on iron ore mining with a view to strengthening our resilience to future shocks. Also, instead of ploughing back the excess revenue from iron ore mining into other real sectors that would sustain the short term economic growth, the APC government embarked on massive public spending on high cost vehicles, huge presidential entourages overseas, repayment of dubious and unverified arrears to friendly contractors, poorly planned roads projects with minimal economic benefits, bloated public service and many other extra budgetary expenditures. The slump in the economy was already in the offing by mid-2014 when the country was hit by the EVD. It is dishonest to blame our economic plight on the EVD,” he read from a prepared statement.
He added: “To date, the exchange rate is depreciating by the week. It moved from Le2, 900 to 1 US dollar in 2007 to Le 4,500 to 1 US dollar in 2012 and as at end September, it was about Le7, 000 to 1 US dollar. In effect, between 2007 to date, the exchange rate has increased by 142%. The simplest explanation for this hike in the exchange rate is our low capacity to export and increasing propensity to imports goods, mostly consumer goods, notably food stuff and petroleum products. Another sad dimension of this is the fact that a substantial percentage of imports are duty free. Most of the companies contracted for road construction and NGOs benefit from duty free. It is no gainsaying that the privileges of duty free are being abused by not only the contractors or NGOs but even public officials. Construction materials including building materials are imported by road contractors under duty free arrangements on behalf of business men. NGOs and public officials import personal goods under the same duty free arrangements.”
According to the SLPP, while the current inflation rate is nearly 11 percent, the government has still gone ahead to increase tariffs and imposed a whopping 15 percent Goods and Services Tax on electricity, thereby increasing the cost of electricity services, without consulting or sensitising consumers, adding that such was in violation of the Electricity and Water Regulation Commission Act which requires that changes in tariff rates should be gazetted.
“The SLPP considers this [austerity] measures as a charade and not robust enough to tackle the economic problem. After all, even before now, government has failed to honour its budgetary commitments to Ministries, Departments and Agencies (MDAs). Quarter I allocation for 2016 were only recently disbursed to MDAs. Local Councils go over six months without receiving monies from central government. Therefore measures to reduce recurrent expenditure cannot be expected to change the situation. The only objective is to meet the fiscal target agreed with the IMF, the expenditure cuts measures are far insufficient to tackle the current problems,” he maintained.
He stated their position thus: “The SLPP holds the view that much can be saved from areas such as temporal suspension on duty waivers except for live saving goods such as drugs, reducing the size of the public service by merging departments, laying off non-essential contract workers bloating the public service,’’ adding that the government should eliminate extra budgetary spending except in cases of emergencies and threats to national security, review policy on duty waiver and institute strict measures that would ensure adherence and prevent abuse , reduce the size of cabinet and lay off non-essential contract workers, including advisers in the Office of the President and Vice President, conduct a more detailed analysis of its expenditure profile and prone those items that do not have much impact on the lives of the poor among other things.