In this analysis, Caucus for Democratic Governance, Ghana (CDG-Gh) will first remind readers of Government`s decision in March 2020 to run to IMF and World Bank respectively for urgent intervention, after three weeks of COVID-19 crises. Some of us were surprised and worried.
We are surprised because this country generally has enough capacity to survive three months imports during crises. Again we worried because official macro-economic figures, at that time, interpreted our economy as strong and robust.
The strong and robust economy however could not contain the stress and so went on its knees. Sadly, as I write, the cedi is falling as never before and is now rated the cheapest currency in Africa. Besides, the energy sector has huge debt; a condition which is bringing back the much dreaded “Dumsor”.
After receiving hundred million dollars, followed by one billion dollars from IMF and World Bank respectively, the Finance Minister , still fearing a collapsing economy, went to Parliament with an additional budget; requesting the use of all remaining funds, including the Heritage Fund, Oil Fund and Stabilization Fund among others.
Meanwhile African contemporaries such as Senegal, Ivory Coast and Kenya, in spite of GOVID-19, had growth rate figures of 2% to 3%, while Ghana was struggling with a growth rate of 0.9%.
HOW WEAK IS THE ECONOMY?
The true weakness of the economy is not known because of divers manipulations the true figures have to go through. In March this year, the economy was at Intensive Care Unit, desperately looking for healing. The Finance Minister presented polished figures to Parliament, proving the economy is strong; but sent the true damming figures to IMF for more loans.
GHANAIAN ASSERTS SOLD BY NANA ADDO
Out of desperation, Ghana`s 10% mineral royalties is to be used by Agyapa Royalties Ltd, as mortgage for 15 years, for payment of 500 million dollars. Similarly the Sino-Hydro deal agrees to use our Bauxite as mortgage, at the cost of 2 billion dollars for 15 years. The GETFUND (used to finance school infrastructure among others) has been given to China for 10years at the cost of 1.5 billion dollars.
Even Cocoa trees have been mortgaged for 600 million dollars. As if that is not enough, the government is borrowing an additional 22.7 billion ghc in three months to keep the fragile economy afloat.
These are a few of many Ghanaian asserts that have been sold by Government. The monies for our children have been collected and are being used by Nana Addo. Certainly posterity will be our judge.
REASONS FOR WEAKNESS
Economy is weak, because:
- Bank of Ghana, which apparently has lost its autonomy to Ministry of Finance, is forced to print ghc 5, 5 billion to finance Government operations and is planning to print more. This practice weakens the economy.
- Excessive borrowing and ever increasing volume of imports, accelerates the depreciation of the cedi and so weakens the economy and reduces its credibility.
- In an economy where economic figures on Internal reserves and Fiscal Deficit of GDP are manipulated (eg, in the 2019 budget), the economy will be weak.
The true economic figures give the total tax revenue collected as 42 billion ghc, while the Government budget is 150 billion ghc. This means, we need about 108 billion ghc to get the economy running. Debt payment and loan servicing, is 38 billion ghc. If you subtract this from total revenue collected, we have 4 billion ghc left over for projects and payment of salaries.
As I write many Government workers have not been paid. Our national debt of 255 billion ghc is the highest national debt in the history of Ghana. Out of this amount Nana Addo alone has borrowed 135 billion ghc, the highest ever, since 1957. Our financial future is gloomy.
ADVICE TO GOVERNMENT
CDG-Gh advises the Government to stop manipulating the economic figures, and open it up for discussion. If government can avoid creative accounting (i.e. putting a number of debts under the baseline to escape accounting), things will be transparent.
If we can go back to the original “baseline to GDP”, the economy can be fairly well assessed. If we can reduce imports and borrowing, the economy will react.
The Government should aggressively embark on pruning the size of the Government (eg 135 Ministers and over 2,000 Presidential Staffers) ; reduce imports and taxes, and invest in productivity instead of consumption ; then the economy will react positively .
In difficult times like this, it is not prudent to waste 186 million on needless voter`s register.
By Dr E K Hayford, Executive Director, CDG-Gh