THE Institute of Economic Affairs (IEA) has asked government to include clear investment plans in the 2024 budget to revive three key national assets -the defunct Ghana Airways, the Black Star Line, and the Tema Oil Refinery (TOR).
Reviving the national airline, shipping line and the country’s refinery, the policy Think-Tank said, would not only be critical in addressing the persistent foreign exchange pressures, but help in generating more domestic revenue.
Their revival would also contribute to economic stability and sustainable development, while creating high income-earning jobs for Ghanaians, leading to better living conditions.
That formed part of the key recommendations of IAE ahead of the 2024 budget, expected to be presented on Wednesday, November 15.
Ghana Airways, the country’s flag carrier ceased operation in 2004 with plans to revive it yet to come alive, while the operations of the Black Star Line fizzled out in the late 1990s.
The Tema Oil refinery last refined crude oil in April 2021, and had since been utilised for the storage of various refined petroleum products for onward supply to customers, the Board and Management of the company said on June 24, 2023.
Expressing concern about the defunct air and shipping lines, IEA asked: “What happened to important assets like the national airline – Ghana Airways, and the national shipping line – Black Star Line?”
“Why can’t we restore them since they provide important services and their absence means that we have to pay huge amounts of foreign exchange for travel, freight and insurance services to foreign companies when we could rather have earned income from these services?”
IEA also asked:” What is going on with another important asset, Tema Oil Refinery (TOR)? Why can’t we find the money required to rehabilitate it so that we can refine our own oil as well as other countries’ oil for profit?”
The Board and Management of the refinery, which has not refined crude oil for the past two and half months [since May 2021], said: “TOR is saddled with enormous debt that extended beyond US$400 million.”
It was explained that: “There are reconciliation issues with customers related to product accounting and the Company is unable to meet its ongoing operational expenses from internally generated cash flow.”
The Think-Tank’s expectation is for the government to use the 2024 budget to start the process of restoring the Ghana Airways, Black Star Line, and TOR, which it said “are key to our economic growth and development”.
The IEA noted that the ongoing US$3 billion loan-support programme with the International Monetary Fund (IMF) had some spending restraints.
It, however, said: “We cannot allow the Extended Credit Facility (ECF) programme to stand in our way in pursuing these important national goals.”
The IEA observed that government had initiated some expenditure cuts under the ECF, including a cut on executive pay and limits on expenditures by Ministries, Departments and Agencies (MDAs).
It, however, said downsizing government and the Office of Government Machinery would be necessary in reducing the overall government expenditure, adding that, “doing so will send the right signal about the need for belttightening by all in these difficult times.”
The Institute also called for streamlining of the country’s tax system, and tapping into natural resource receipts intensely, as a way of intensifying domestic revenue mobilisation.
“A stronger fiscal adjustment, entailing a strong revenue mobilisation drive combined with an equally strong expenditure control and rationalisation effort, could reduce the debt significantly during the period, while at the same time creating space for the under-funded development and social spending,” said, IEA.