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19.02.2003 Feature Article

IMF Policies: Swallowing Them Hook, Line and Sinker

IMF Policies: Swallowing Them Hook, Line and Sinker
LISTEN FEB 19, 2003

Gradually, the streets in our country Ghana are becoming busy. Whilst the vehicle population is waning, the number of commuters is building up along the streets. At the lorry parks and at bus stops the passengers only raise their disappointment a level higher before striding towards their destination. This is no joke; for these are not members of a voluntary keep-fit club exercising for their health; but, rather, a group of frustrated individuals who are reeling under the throes of petroleum price hikes.

In another development, workers are massing up. Clad in red bands and mufflers, the placard bearing labour force is chanting and matching on and on but to one destination with one purpose: to present a petition to the minister of Employment and Manpower and Development. Again, this is no joke; since this group also claim they have been pushed.

Yet still the story continues. The junior doctors are laying down their tools. This, too, is no joke, because the claim is the same: they have been pushed. But do you know what it means? Simply, the doctors prefer to see their fellow Ghanaians with minor sickness die before their very eyes rather than wait for they themselves to die of hunger. Moreover, the frightening news hints that other groups may follow soon. So the push, push, push syndrome reminds me of that solemn prologue by W. B. Yeats, which introduces Chinu Achebe’s book, Things Fall Apart: “Turning and turning in the widening gyre The falcon cannot hear the falconer; Things fall apart; the centre cannot hold; Mere anarchy is loosed upon the world.” In as much as I sympathise with the NPP for now coming face to face with Ghana’s economic realities, I feel sad and uncomfortable at the way the government officials take pride in their ability to take difficult decisions. His Excellency, the President, Mr. Osarfo Marfo, Mr. Jake Obetsebi Lamptey, Mr. Kwabena Agyepong and almost every member of the NPP have sought to prove that by making Ghanaians pay more for utility services and other commodities, their government has done what Napoleon could not do. Oh No! There is no Napoleonic victory here to rejoice over. There is no pride taking for being able to inflict pains, and no celebration for being able to visit pangs of hunger on the citizenry just because you one fears not to lose one’s political goodwill. After all, it is the people who carry the burden of any good or bad decision the leaders make. So if the people did not complain but decided to groan until the saviour comes, is it fair for the authorities to boast? The Need For A Sense Of Propriety To me, the NPP is oblivious of the dynamics of our society, and the earlier someone draws their attention to it the better for our development. As such, the following points are important to note. It is only when the confidence of our citizens tarries till the end of any programme, at all, that promises heaven can a government claim to have succeeded. And to maintain this confidence, the government must endeavour to demonstrate that they are not ready to swallow the World Bank and IMF policies hook, line and sinker, something they cannot disprove to Ghanaians for now. Or let us examine a report carried in the magazine, Africa Review, of April 2002 by John Offei-Ansah to see if my fears are baseless. The report stated that in line with the HIPC initiative, a statement issued by the World Bank in Washington late February said the bulk of additional assistance under the Initiative would be delivered when Ghana completed a number of agreed measures. Included in these measures is the establishment of automatic adjustment mechanisms for full cost recovery in the petroleum and electricity sectors; hence the almost 100% increases at the heel of another increase in electricity and water last year, pending a top-up in March this year. In this light, where lies the sense of propriety in these programmes to call for ownership, since the situation as it pertains now only show how we have become the appendage of the Briton Wood institutions. Talking about the need for propriety, I wish to quote three paragraphs from the said report under the sub-heading “Commodity Shock” to illustrate how impracticable the IMF programmes have become in our peculiar circumstances. “The World Bank noted that Ghana’s macroeconomic and structural adjustment record over the past decade was generally positive, although interrupted periodically by episodes of weak macro-economic management and exogenous shocks. The most recent such instance was a severe terms of trade shock in 1999/2000 that resulted in lower prices for cocoa and gold, Ghana’s main export commodities, and higher prices for petroleum, the largest imported good. This shock, together with a delay in adjusting fiscal and monetary policy, led to a sharply higher inflation and build-up in external arrears. As a result, the exchange rate depreciated rapidly, losing half of its value in the year 2000. The situation was compounded by delays in the adjustment of domestic petroleum prices and electricity rates, resulting in an accumulation of large bank debts at the state-owned Tema Oil Refinery”. I have no problem with this economic observation though. Yet my concern is about the suggestion by our Big Daddy, the World Bank, that the hob of the problem has been the delay in adjusting the fiscal and monetary policies alongside the adjustment of domestic petroleum prices and electricity rates. Yes, the hob maybe the same in two different countries but what about if the spokes attaching the hob to the wheels are weaker in a particular country. To wit, every economist knows the above trick. Even the first year student in economics knows that mopping excess liquidity in the system would succeed in cutting down excess demand, hence the rate of inflation. But what about when this cut would affect essential commodities that relate food, clothing and shelter. Bookish Solutions To Practical Problems On a technical note, the theory of Income Elasticity of Demand shows that the consumption pattern of Ghanaians and that of those prescribing the bookish solutions to our problems are not the same. Whilst most of the income of our people go into securing basic physiological needs, that of our instructors go into enjoying better and extra services including good holidays and tourism. As such, they risk almost nothing when they quickly and easily adjust their policies at a smell of trouble. In our case however, it is real gamble with survival. Otherwise the government has applied the IMF doses of economic therapies and all hell seems to have broken loose. What we cannot predict, however, is what happens if circumstances, as we are witnessing now, push the people to the edge of the cliff. Heading Towards The Grave Through The Gate Of Starvation In spite of the bitter truth, some are still trying to imply political undercurrents. Such insinuations, however, only tend to prove that some people are still out of touch with the reality. There is therefore the need to help such people see the bigger picture by using a scenario: Imagine a Laissez fair economic system where the government allowed the taxi drivers, for instant, to charge what they wanted. They charged 1,500cedis instead of an approved 800cedis. And as the passengers cannot afford the fares, they boycotted the taxis and started walking. But eventually, the drivers beat a retreat. Being compelled to earn a living at all cost, they started charging something affordable, yet they were soon to realize that they cannot meet the cost of running their vehicles let alone earn the living. Consequently, it means whether taxi drivers accepted to charge what is affordable or not, both driver and passenger are gradually heading towards the grave through the gate of starvation. Shifting The Goal Post Persistently and Consistently The foregoing illustration is exactly what the prescribed IMF policies are doing to our people today. But what is more disturbing is the way government keeps moving the goal post. Today, they sat down with the Drivers Union in Kumasi to ask the Urvan buses to take three passengers in a roll instead of four, which eventually affects the transport fares. Then tomorrow, the people through the FM stations cried and shouted resulting in a retraction of that decision. Another day, the government in collaboration with the Drivers Union again declared a 30% increases in lorry fares. Then the following day, the drivers cried and shouted leading to the announcement of an ambiguous percentage increase: an “average of 40%” implying that no concrete decision at all has been taken. And so chaotic has become the results that the drivers and passengers are fighting over what is right. Yet, the fact cannot be denied. The situation as it is now demands that government inspires confidence in the people so as to convince them that they are on top of affairs. No insinuations and innuendos against political opponents would do the trick. Instead of going round talking and begging people for unqualified support, government should prove that they are in full control and in firm grip of the economic levers with which they can create the right environment for attitudinal change and progress. The Danger Otherwise what do we risk when people lost that confidence? Two major dangers would loom. First of all let us be conscious of the fact that there is only a thin membrane between needs and wants, for which reason the government must be wary of playing into the hands of the people. For, whilst needs could be met, human wants are insatiable. Yet, once the membrane between the two is removed, people would be confused as to what to demand and expect from government. Secondly, people would push the government till the government spend all their time pushing the people back to their territory. If that happened, the people’s trust in the entire democratic system and for that matter any future government would wane. Your guess is as right as mine about the resultant effect. So, with due respect, I wish to appeal to Mr. President to allow me to differ that the ability to take tough decisions is not what the people wanted most. Rather, they wish that the Father of the nation would be in pain, moaning with them over the repercussions of a decision that was forced through our throats hook, line and sinker by our financiers. Please, if you care less about what happens to the political goodwill of your party, please care a bit about the effects of your tough decisions on the livelihood of your people.

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Raymond Tettevi
Raymond Tettevi, © 2003

The author has 9 publications published on Modern Ghana. Column Page: RaymondTettevi

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