GHANA IN SEARCH OF A DEVELOPMENT PARADIGM? (Part three)

Debates on whether Ghana should Wean herself of the Bretton Woods Policy Prescriptions

This part should have concluded my three-series analyses of debates on whether Ghana should wean herself of the Bretton Woods institutions of the International Monetary Fund (IMF) and the World Bank Group's (WB) conditions-tied support. I have, however, decided to split it into two to make it easy for reading. This part, therefore, begins the examination of the current debates while the very last part, which follows shortly, contributes to suggestions being made regarding possible ways out of our country's development challenges. I wish to thank ModernGhana.com for publishing the first two parts.

Debates on the activities of the Bretton Woods institutions in Ghana have been a longstanding one. They are as old as the relationship between the institutions and the country. Initially, the contentions were based on whether the neoliberal policy ideals that are associated with the policy prescriptions of the institutions were appropriate for tackling the development challenges of a developing country such as Ghana. This was largely due to their anti-development expansionary nature including loss of jobs, withdrawal of economic, social and agricultural subsidies, contraction of government development programmes and privatisation of state-owned enterprises. As the policies appeared to have been failing in that regard, the debates shifted to whether they have been able to tackle the development challenges of the country. Then, the current debates, as stated already, have to do with whether Ghana should wean herself of the institutions conditions-tied borrowing. The current debates have been triggered by the Kufuor administration's decision to wean the country of the institutions in 2006 and the reversal of the decision by the Mills' administration in 2009.

Those that support the previous administration's action argue that the return to conditions-tied borrowing is unnecessary because the decision was based on panic and not carefully thought out. According to them, the country had recorded surpluses from 2005 to 2007 and the high deficit (over 14% GDP) at the end of 2008 was a result of the internal and external economic challenges, which the country encountered that year (enumerated in part two of this analysis). In contrast, those that defend the reversal contend that it was unacceptable for the country to record that level of deficit just after a short period of gaining her independence from the institutions. The high deficit for them, meant that the country is not matured enough to be allowed on her own.

While it is not bad to seek for the institutions' support with their associated conditionalities, the difficulty is whether or not the support has adequately been tackling the problems for which reason they are being sought since 1966. Thus, while over the years we appeared to have observed the conditions that are tied to the supports, they seem not to have effectively tackled our development challenges over three decades. It is for this reason that some think there is a need for a change in development paradigm or approach. This sounds logical unless we think that the inability of the institutions' policy prescriptions to tackle our development challenges is our own doing rather than the suitability of the policies to our situation.

Over the years, we seemed to be at the receiving end of the failure of the policies. For instance, the Busia administration's liberalisation package was described as 'reform at half-cock' because it was not comprehensive enough. We have also been accused of inconsistency in the implementation of the policies since they were first introduced in 1966 as they were discontinued by the Acheampong administration as well as the intermittent changes in political administrations between 1966 and 1980. Even the failure of the policies in sub-Saharan Africa as a whole has largely been attributed to bad governance, lack of markets and uncertainty of returns to investments in the agricultural industry as a result of the unpredictability of weather conditions to which the industry largely depends.

In a report on the fifty years of the relationship between Ghana and the World Bank Group in 2007, the Ghana Country Director of the Bank in response to criticisms regarding the failure of the Banks' policies over the years, argued that the Banks' mandate is to provide support to the government and it is the responsibility of the latter to deliver results. In other words, if there is lack of results for the Banks' investments, Ghana government should be the one to explain why, not the Bank. Similarly, the Banks' representative at the launch of the fifty years anniversary celebration of the relationship between the Bank and the country also in 2007, indicated that under the Growth and Poverty Reduction Strategy (GPRS) and the Multi-Donor Budget Support (MDBS) system, Ghana has been in the driving seat deciding what its development priorities are, and that the Bank only supports the processes. This clearly is another instance of the institutions trying to shift responsibility to government and the people of Ghana notwithstanding whatever conditionality come with the Banks' support as these processes are still associated with conditionalities. It will be recalled, that the IMF Deputy Director in reaction to civil societies' criticisms that the Fund took advantage of the economic challenges that the country encountered in 2008 to return the country to its conditionalities, argued that the institutions' policy has never been to lord it over borrowing countries and that the conditionalities the country is observing currently including a two-year freeze on public sector recruitment, increases in tolls and taxes and continuous privatisation of state-owned enterprises, were the making of Ghana government rather than the Fund.

The Fund's Deputy Director might have been making these remarks within the context of the GPRS, MDBS and the Growth and Poverty Reduction Facility (GPRF) processes, under which borrowing countries are supposed to own and decide on their development policy priorities. But critics have argued that this is not the case in reality and even tend to describe these new arrangements as SAPs in disguise. This is because while the new arrangements encourage consultative processes, they are not the case in reality as the processes are not transparent. Recent media reportage, for instance, gives credence to this contention as some media reported the outgoing Majority Leader of Ghana's Parliament. Hon. Sumani Bagbin urging the Deputy Director of the IMF referred to above, not to limit its consultative processes to the Executive arm of government alone but Parliament as well since the latter is somewhat the representative of the populace.

In response to arguments that bad governance was partly responsible for the failure of the liberalisation policies, critics argue that the institutions presided over bad governance in the process of the implementation of the SAPs since they were implemented largely without the participation of civil society. In Ghana, for instance, the SAPs were implemented under the PNDC regime that did not allow civil liberties including freedom of expression, which would have enabled civil society to make input into the negotiations and implementation of the programmes. Critics also argue that while the country has endeavoured to deliver on its commitments in terms of abiding by the conditionalities including settlement of foreign debts, there has not been a reciprocation by the institutions to deliver on their part of the commitments. They contend that the country and sub-Saharan Africa in general appeared not be a priority in the investment decisions of international financial institutions including the Bretton Woods, though that was part of the agreement for the acceptance of the liberalisation policies. Where there has been some investments, critic argue, they have been tailored towards the extractive industries (mining and logging) to the neglect of agriculture and manufacturing. It is for this reason that some analysts argue that liberalisation policies have often been aimed to ensure that countries pay their debts rather than being tailored towards the long term development needs of liberalising countries.

The above account has tried to examine the back and forth arguments regarding our relationship with the Bretton Woods institutions since 1966 when the institutions first prescribed economic liberalisation policy ideals to tackle the country development challenges. While we might have chalked some temporal successes in terms of economic stability, the balance sheet indicates that our reliance on the institutions' policy direction for over thirty decades to tackle our development challenges still leaves us at the mercy of internal and external economic dislocations. The big question is, is there any way out of this predicament? The final part of these analyses considers this so stay tuned.

Many thanks, I appreciate the time you have spared to read this. I believe strongly that together we can find lasting solutions to our country's development challenges.

S. A. Achanso
Ph.D. Candidate
Social Policy Research
University of Lincoln
UK.
Mob: +447884126483