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13.01.2009 Feature Article

Ghana's Economic Outlook versus Higher Expectations

Ghana's Economic Outlook versus Higher Expectations
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If Ghana's 2009 Economic Outlook released by the World Bank about a week ago is any good indicator, then ladies and gentlemen, we must all brace ourselves for a rough ride in the months ahead. The current situation on the ground does not look good.

The report which was released by the World's Bank Country Director, Ishac Diwan warned President Mills that his administration would inherit a high fiscal and balance payment deficits that were unsustainable due to the current volatility in the global financial markets which has caused belt tightening in all major economies.

The World Bank report which cited the mid-December data presented by the Bank of Ghana and the Ministry of Finance stated that the current global economic constraints, would force the Mills´ administration to spend 14 per cent of the total Gross Domestic Product (GDP) to service fiscal deficit. Fiscal deficit occurs when a country's total expenditures exceed the revenue it generates, which in effect means Ghana was spending more money than it was generating.

The World Bank which saw impending socially painful financial crises in Ghana, therefore warned the new administration to put in place urgent measures to reduce the country's fiscal deficit and balance of payment deficit.

President Mills who made a lot of campaign promises would therefore be confronted with this huge problem that confronts not only Ghana, but almost every country across the globe. This is the more reason why that I drew the attention of Ghanaians to the fact that it was unrealistic for Kufuor to have blindsided President Mills by signing off on the huge pay increases to the public sector workers in the wee hours before he left office.

The point that I was trying to drum home was that the recommendations for the pay increase was made way back in July 2008, therefore, if Kufuor knew that his government could not cushion the increases at that time and shelved it for five good months, why thrust it on the throat of the new administration?

There were those who agreed with the point that I made while others thought I was just being partisan. Ladies and gentlemen, I do not earn anything by being partisan but when something is wrong it's wrong. If the pay increase was reasonable, I bet Kufuor would have implemented it way back in July or at best August 2008, especially when his party was running for re-election.

Now it seems what I said is earning some vindication from the NPP camp. A report carried by Joy FM has stated that former Finance Minister, Mr. Osafo-Maafo, who is a staunch NPP guru has condemned the last minute "Kweku Ananse" pay increase by Kufuor. Mr. Osafo-Maafo pointed out that with the current global economic crises which has led to serious recession any increases in expenditure without a corresponding increase in revenue would be suicidal for our dear country.

President Mills assumes office with high expectations from Ghanaians, some of whom have already started calling on him to honour his campaign promises when he does not even have a permanent office yet. (President Mills is moving his temporal office from the Accra International Conference Centre to the Castle, Osu because the Presidential Palace that we have heard so much about is yet to be finished).

Ghanaians expect President Mills to fix the economy first and foremost. They also expect him to stimulate economic growth by adopting measures that would lead to job creation for millions of unemployed youth. In addition to this, we also expect him not to abandon the economic and social responsibilities like roads, schools, hospitals, housing and good drinking water. And the last but not the least, good salary structure that would make life more bearable for Ghanaians.

Looking at the Economic Outlook, if President Mills´ were even to turn into a magician he would not be able to accomplish them all. At best either some of these responsibilities would have to be sacrificed or receive deep cuts. This brings us to a news conference held by U.S. President-Elect, Barak Obama last week.

Unveiling his measures to overhaul the U.S. Social Security and Medicare, Barak Obama told Americans that he wants to pursue a vigorous plan to keep the U.S. government finances from deteriorating. He therefore, used the occasion to introduce Ms. Nancy Killefer, as the country's Chief Performance Officer. This lady's role would be to critically examine the U.S. Budget line by line, eliminate items that the country does not need, eliminate items that do not work for the U.S. and also improve the items that do help the U.S.

Indeed every country including Ghana has budget items that cause a lot of waste of public funds. Therefore, I would suggest to President Mills to consider appointing somebody in his administration who would also examine budget items submitted for funding and advise on what is prudent for the country. It is a fact that Ghana continues to throw good public funds to the wind due to the fact that some of the budget estimates submitted are unrealistic. That is one of the reasons why we have such a huge fiscal and balance payment deficit staring us in the face today.

If Ghana is going to move forward, some of these wastes of public funds need to be eliminated, otherwise no amount of economic measures put in place by the current or future administrations would put the country on a sound economic footing.

Credit: Ekua Kwansema [[email protected]]
Ekua Kwansema
Ekua Kwansema, © 2009

The author has 75 publications published on Modern Ghana. Column Page: EkuaKwansema

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