IMF Clarification On Macro-fiscal Data Does Not Change True State Of Ghana's Economy - Prof. John Gatsi Writes
The clarification by the International Monetary Fund (IMF) will generate further political debate about the economy. The data published by the IMF shows the true state of the economy.
The whole issue about misreporting is not about misreporting of economic data to the IMF but to the people of Ghana through the budget. We believe the data published by the IMF to be true. So what is the IMF explaining to us?
The people of Ghana know the deficit in 2019 to be 4.5% but the IMF knows the true state of the deficit in 2019 was 7.5%.
We believe the correct data was presented to IMF and what is now known as misreporting is to Parliament via the budget.
The explanation by IMF is strange and maybe tagged as involved in domestic politics. We are guided by our Constitution and financial management principles, objectives and strategy enshrined in the public financial management act 2016 (Act 921) in which the finance minister is the main executive member with financial management responsibility. It is, therefore, the finance minister who should face the country to explain the data agreed upon with the IMF. It is unnecessary for the IMF to attempt to do what the finance minister should be doing.
Now to the substantive issues. Take for example that Ghana raised $2bn in a year but spent $3bn and decided to divide the extra $1bn into $600M and $400M and stated in its financial statement that over expenditure was $600M but disclosed in the notes to the financial statements that the country overspent another $400M which was also approved by Parliament.
Now how much is the over-expenditure that parliament approved on behalf of the people? The answer is $1bn.
Now why did the IMF accept the figures presented by government in its dataset? The answer is that it is the true picture about the Ghanaian economy, therefore, the true picture of the deficit, reserves, debt to GDP ratio and primary balance as well as GDP growth presented by IMF from the data supplied by government remains the true state of the Ghanaian economy.
Ask any of the IMF team, a member of the minority or member of government that if they are taken as consultants to look at the macro- fiscal data in the budget and that of IMF data for a client to provide macro-fiscal situation of Ghana to take/make critical and informed decisions will they look at the true state as presented by IMF or not?.
Accountants will tell you the purpose of the notes to an account gives extra critical information that you must use without which your assessment of the account is meaningless and incomplete.
The separation or no separation of financial sector and energy costs does not take away the fact that the true state of the economy is what the IMF data presented and the granting of the $1bn Rapid Credit Facility was based on the true state of the macro-fiscal situation that is why the IMF attached it to the disbursement letter to Ghana.
They disagree to agree or agree to disagree clarification by the IMF doesn't change the premium Ghanaians, international institutions and investors place on the true state report by the IMF.
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