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08.08.2021 Feature Article

Prof. John Gatsi writes: Economic management outcomes do not favor the unexplained high debt

Prof. John Gatsi writes: Economic management outcomes do not favor the unexplained high debt
08.08.2021 LISTEN

The demand for accountability, debt transparency and the essence of economic management should be discussed truthfully and with due respect to Ghanaians.

For the avoidance of doubt , the essence of economic management is well documented in Article 36 of the 1992 Constitution. This Article is about economic objectives of any government. “Among others the national economy should be managed in such a manner to maximize the rate of economic development and secure the maximum welfare, freedom and happiness of every Ghanaian and provide adequate means of livelihood and suitable employment and public assistance to the needy .“

The question that managers of the economy should ask themselves or their audience is whether or not they are happy with public assistance in this country . Ghanaians want to be asked if they happy about employment and livelihood matters.

Economic development is markedly different from intermittent economic growth and is different from lower inflation generated as a result of changing base period of Consumer Price Index.

An objective observation of the economic management outcomes of the Ghanaian economy especially during the period of high debt, does not deserve any clapping for managers of the economy. This is the time the managers must be humble and assure citizens . Claiming prudence in failure to deliver on the requirements of the economic objectives for Ghana is dangerous and insulting.

It is advisable if managers of the economy assess their economic management in line with Article 36 and stop forcing people to clap for them for wrong statements.

For the avoidance of doubt debt is to contribute to economic management. Debt whether high or low is not meant to reduce inflation. Debt is not primarily meant to ensure exchange rate stability though there are some relationships. For the avoidance of doubt check the purpose of public borrowing in section 57 and public debt management objectives in section 58 of the Public Financial Management Act, 2016( Act 921). It is a fact that the management of the international reserve has seen support from borrowing which has some influence on exchange rate development, it is a fact that you borrow primarily to finance the budget deficit , finance development projects and as directed by section 57 as mentioned earlier.

This theory of prudent economic management is rising with rising debt is unfortunate and unsupported by any data. Data from 2019 as captured in the 2021 IMF Article IV Consultation report on Ghana, shows a deficit of 7.5% in 2019 just a year after the celebration of the passage of the Fiscal Responsibility Act which pegged deficit at 5%. In the same report, the debt situation has been described as nearing potential risk of default within the framework of high risk of debt distress. Labour agitation based on firm socioeconomic argument is one of the signs of unmet economic objective.

Prudent economic management has been defeated since 2019.

Let us not forget that in discussing, economic management objectives, Article 36(2) enjoined the managers of the economy to build a healthy and sound economy with the following underlying principles- guarantee of fair and realistic remuneration for production, affording ample economic opportunities for all and ensuring even and balanced development.

If managers of the economy think they have done well the test is bring together only your members and honestly ask them about their satisfaction based on the above. I think it will be unpleasant.

Another measure is the recognition that our democracy is secured when it assures basic necessities of life to our people as a key consideration of economic management outcome.

Again in discussing economic management , Article 36 (3) requires particular devotion to agriculture and agricultural led industries. We are importing yellow corn to feed poultry industry.we are not discussing fertilizer access for farmers yet.

The rule for the managers of the economy is that if you don’t read Article 36 don’t create theories about economic management.

In dealing with debt the answer is very simple , tell the people what the debt has been used to create for Ghana.

Our economic history should not be distorted . It was NPP that sent Ghana to HIPC. It was NDC that sent Ghana to IMF in April 2015 and it was NPP that extended the exit period from 2017 to 2019. It is NPP that got GHS1billion from IMF in 2020 for Covid-19 purposes.

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