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19.07.2019 Feature Article

Ghana’s Economic Dilemma

Ghana’s Economic Dilemma

The week has been confronted with major discussions about bails and bailouts, whatever the differences might be, I don't know but as sure as the sun will rise, granting a bail to a person in conflict with the law and offering financial bailout to a person in financial crisis cannot be that different. The common characteristic is that the two individuals are in a crisis of some sort, be they medium or long term. One requires his freedom from the shackles of the law even if momentarily while the other needs cash or payment reliefs in the short or medium term to solve a problem.

The major discussions in the media within the week and days before had been the recalcitrant attitude of state law enforcement agencies to enforce a bail granted by a High Court of the Republic, trying Mr.Gregory Afoko who is accused of murder after being in Prison custody for the past four years. As the debate rages on, the International Monetary Fund (IMF) also drops a bomb that if the nation does not take care, it will soon be calling for a bailout. The two bails come with conditions.

In the case of conflict with the law, the bail conditions for one's freedom require property or individuals who the state can fall on to produce the person should the person fail to offer himself to the court when needed. The conditions attached to the financial bailout requires certain policy directions that ensure prudent balance of government revenues as against its expenditure as it were. Primary conditions for such financial bailouts have been a squeeze on public sector employment, removal of subsidies on certain goods and services to ensure a cut in government expenditure and in relation to its revenues. It is just a matter of realistic observance of financial discipline and common sense.

Ghana has entered and exited the IMF enclave and its concomitant conditions for financial support for the 16th time. Each time we get out and make a pledge to ourselves that we will never step there again, we easily go back to our bad ways and eventually commit ourselves to the global financial institutions we have so much assailed and denigrated as if they had been our primary causes of our woes.

Ironically, other nations which at one point in time suffered from the same or similar economic malaise and were offered the same or similar economic prescriptions have managed to lead responsible lives and improved their social and economic conditions. Ghana began its Economic Recovery Programme (ERP) in 1983 almost at the same period when what became the Asian Tigers of the Highly Performing Asian Economies (HPAEs) became the nation worthy of emulation by other developing economies.

At a point in time, of the Economic Recovery Programme and its twin sister, the Structural Adjustment Programme, Ghana was touted as a model of economic recovery in the sub-saharan African region. 'The thrust of fiscal policy was to reverse the decline in revenue, a trend that had lasted for more than a decade. Revenue collection rose dramatically between 1984 and 1987, and the resources enabled the government to pursue more expansionary policies without enlarging its fiscal deficits, so said the World Bank at the time.

The Asian Tigers embarked on private domestic investment and rapidly growing human capital as the principal engines of growth. 'High levels of domestic financial savings sustained the HPAEs high investment levels. Agriculture, while declining in relative importance, experienced rapid growth and productivity improvement. Population growth rates declined more rapidly in HPAEs than in other parts of the developing world. And some of these economies also got a head start because they had a better-educated labour force and a more effective system of public administration' so said the World Bank.

In spite of the economic meltdown some of the Asian economies experienced in the 1990s, those countries have raised their heads high by doing so many things right, among them; targeted and subsidized credit to selected industries, kept deposit rates low and maintained ceilings on borrowing rates to increase profits and retained earnings, protected domestic import substitutes, subsidized declining industries, established and financially supported government banks among others as internal policies to work hand in hand with whatever conditions had been imposed on them by external financial institutions.

Ghana, 36 years after going through the ERP and the SAP, we are still being cautioned that we are a sure candidate for an IMF bailout looking at the way we are managing our affaires just less than three months after shouting halleluya and pouring white talcum powder on ourselves for exiting the IMF programme we voluntarily entered in 2015 to achieve policy credibility in the eyes of the world and not to fashion out policies that expand our economies and create jobs for the teeming unemployed youth.

Governments after government have prided themselves with economic growth, using GDP percentages as basis for very good jobs done. Surely and verily, economic growth is so important for a nation but the quality of the growth is as important as the pace of the growth. Improvements in the quality of lives of a people and the ability of a people to shape their own future are critical in any discussions about development.

Six decades and over after independence, the state of rural poverty has worsened such that the rural urban migration is at its ascendancy at any point in time, creating more slums in the cities and towns with its attendant crimes. Unemployment continues to push otherwise decent young people into the underworld. Rural roads, particularly those leading to the farm-gates are terribly bad thus discouraging the youth from farming activities since their produce get rotten after a year of hard work.

River bodies are criminally polluted while basic educational infrastructure in the 21st century; in some cases are nothing to call what they are supposed to be. Sadly, the nation keeps on borrowing and paying huge interests rates for what we cannot point our fingers to. Every single sector of our social and economic requirements is depressed and requires huge investments to restore. Health facilities, where they exist, are fast deteriorating, roads are so terribly bad, potable water provision is absent to the majority of the people, jobs are scarce. So what at all do we use the borrowed monies for?

Ghanaians have become so fascinated with grandiose and glamorous edifices to the exclusion of basic sub-structures that serve the needs of the poor and the majority. That is why governments would borrow to build so-called 'Dubais' in Ghana while the arterial roads to populous settlements even in the cities remain terribly bad. We are interested in shopping at Malls where 95% of the consumables are not important instead of improving our local markets where food stuff produced locally can be stored under much healthier and safer conditions. And the next moment, we are concerned about the depreciating currency, and governments are quick to fine hard earned foreign exchange to support elitist consumption even as the health facilities lack modern and sometimes basic equipment for our wellbeing.

A nation that does not go through some of the deadly and sickening natural disasters that wipe off whole communities and cities elsewhere in the world, where do we spend our off-budget monies? We should stop living like Kings when we do not have the resources to be treated like Princes and Princesses. Our individual lifestyles and those of government and CEOs of public institutions do not indicate that this country is still in the woods. Another entry into the IMF enclave is imminent. What reasons would be given?

Daavi, please, give me poor man's cognac, just three tots.

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Kwesi Biney
Kwesi Biney, © 2019

This author has authored 89 publications on Modern Ghana. Author column: KwesiBiney

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