Our economists, financial experts, and civil society organizations have started assessing the true health of the economy, exposing wasteful spendings and manipulated economic figures. The International Monetary Fund (IMF) cautioned Ghana against excessive borrowing and warned that Ghana’s risk of debt distress classification is still high. The fund further argued that this reflected the lower GDP growth in 2019 and a higher government deficit (largely due to energy sector cost) and debt service over the medium term. The truth is that for three years, Ghana has battled the suspicion that its new and improved GDP series is a rose tinted view of reality and the Covid-19 pandemic has confirmed that suspicion.
Going by the early official response to the critique, it was clear that government wanted to brazen it out. The President and his economic management team should have seen the economic cost of that approach even if their propagandists didn’t. Ghanaian voters don’t care about abstract and manipulated statistical artifacts like GDP. They care about Jobs, provision of social amenities, state subsidies, and the cost of living.
Misleading GDP data is one of the reasons why most balance sheets are over stressed today. When Hon. Isaac Adongo , Prof. Gati, Mr Kwame Pianim and other renowned economists advised government to restore sanity to the published figures, the President himself and his propagandists were everywhere accusing them of running politically motivated campaign. Some of the people complaining about government’s reckless spending today, turned blind eyes to the bruises this government was inflicting on the economy. Now they’re scared. The coronavirus pandemic has taken the government by surprise and will expose underlying economic weaknesses wherever they lie. The potential for aftershocks, such as the recent plunge in oil prices following Russia and Saudi Arabia’s failure to agree on coordinated output cut is what our economic management team should be thinking about. The pandemic has unmasked the fragility of the state of our economic which was described as robust and the fastest growing on the continent of Africa.
The huge amount borrowed by this government were spent on debt servicing and consumption which creates extra burden on the economy. Borrowing countries if invest the fund into productive development programs like the Mahama administration did, they certainly would enjoy macroeconomic stability. This automatically results in lowering the debt obligation and increase in the economic growth. Reasonable levels of loan accelerate economy and beyond a certain level it affect the economy negatively. That informed President Mahama’s decision to end domestic borrowing and allow certain state agencies to borrow on their own strength. The terminal 3 was built through that rrangement. The widely used indicator to express debt is percentage of GDP or debt servicing as a percentage of exports and fiscal deficit for both external and internal. Government is unable to initiate new development project and finance vital imports because of the rising debt which the IMF latest report captured. Government resorted to use of propaganda to deceive the public. Private projects and companies were labelled as part of the government’s 1D1F flagship program, government in collaboration with state agencies churned out fake economic figures, airtime were brought to misinform Ghanaians and foreign media outlets were bribed to project the administration and the economy.
The country’s credibility surged as a result of the Mahama-IMF negotiation. This administration took advantage of the credibility gained as a result of the negotiation and other policies rolled out by the previous administration, to borrow senselessly. Credibility of a country is a key factor in obtaining a loan on soft conditions and low interest rates. This administration never accorded the previous administration that credit. It lied to Ghanaians that it was getting low interest loans because of the government’s image. What image? The unprecedented increase in debt has taken us back (loss of credibility) and that was what the IMF and other institutions pointed out to them.
So, our experts for three years, focused their attention on the previous administration and were sniffing around to get bad news about the former administration instead of holding the incumbent accountable. This approach to accountability created limitless space for the President and his team to bombard us with their barefaced lies, cooked figures and propaganda theories. The effect is what we grappling with now. Revenue collected by this administration is unprecedented as a result of the huge investment the previous administration made in the oil sector yet, government cannot point to one major project. We are now being called upon to support government in its covid-19 fight.
The President just told us that the economy which was described as a robust economy, hailed by its media friends and also described as the fastest growing on the continent of Africa could not survive two weeks of covid-19 shock. Government is now going back to the IMF and apart from that, has decided to empty the heritage fund. This is the beautiful economy Akufo-Addo presented to Ghanaians. For a government which came to power on the back of a promise never to go back to the IMF, borrow recklessly, that is a lot of egg on its face. Note the brazen manner in which the Vice President and the finance minister declared that a sample survey conducted by their collaborators show there is substantial job creation, the economy is very healthy etc etc. Authentic survey report by independent bodies reveal that unemployment rate has quadrupled under this administration, living condition of the ordinary Ghanaian has worsened, prices of goods and services are skyrocketing, the health service is collapsing. When these authentic reports get out, the government’s mandarins scramble to explain away the findings ignoring the inherent facts. Today, the government is being haunted by these facts.
Source: Ohenenana Obonti Krow