Speakers in a panel discussion on how to thrive in the current economic situation have entreated both the government and the citizens to make personal sacrifices, including lifestyle changes, as their contribution for a quicker turnaround.
The President must lead the way by reducing the size of government, with the number of ministers not exceeding 40 in such a difficult economic time.
However, they entreated the populace and civil society organisations to lead the charge in demanding accountable and efficient governance from public officials, as the country implements an economic recovery programme backed by the International Monetary Fund (IMF).
While urging the populace to brace up for more hardship as the price to pay for the country to overcome the current economic challenges, the discussants stressed that citizen involvement in demanding accountable and efficient governance from public officials was the only means to alleviate the current economic challenges that have brought undue hardships on individuals, households and businesses.
The discussants made their contribution at the quarterly Graphic Business/Stanbic Bank Breakfast Meeting in Accra yesterday.
They are a Professor of Economics and Finance at the University of Ghana, Professor Godfred A. Bokpin; the Executive Director of the Africa Centre for Energy Policy (ACEP), Benjamin Boakye, and the Head of Corporate and Investment Banking at Stanbic Bank, Timothy Mugodi.
The event, the second in the year, was on the theme, “The current economic situation and you: what to expect, how to cope and how to thrive”.
The Chief Executive Officer (CEO) of the Ghana National Chamber of Commerce and Industry (GNCCI), Mark Badu-Aboagye, chaired the meeting.
Context
After 10 months of discussions and negotiations, Ghana finally received approval from the Executive Board of the IMF for a three-year budget support programme aimed at restoring macroeconomic stability and debt sustainability.
The extended credit facility (ECF), which would see the country receive $3 billion, is also expected to support structural reforms and help the economic recovery of the country after two years of economic challenges.
Ghana’s IMF programme is backed by the Post-COVID-19 Programme for Economic Growth (PC-PEG) which is the government’s blue print to address the economic challenges, restore macroeconomic stability, bring debt to sustainable levels in the medium term, support structural reforms, promote growth and ensure that the poor and vulnerable are protected.
Ato Afful (middle), MD, GCGL, exchanging pleasantries with Prof. Godfred Bokpin (2nd from left), Lecturer, University of Ghana. With them are Mark Badu-Aboagye (2nd from right), CEO, Ghana National Chamber of Commerce, Timothy Mugodi (right), Head of Corporate and Investment Banking, Stanbic Bank, and Benjamin Boakye, Executive Director, Africa Centre for Energy Policy, after the Graphic Business/Stanbic Bank Breakfast Meeting in Accra. Picture: ELVIS NII NOI DOWUONA
Expenditure cuts
Prof. Bokpin reiterated that while some ministries could be merged, the appointment of Deputy CEOs for state owned institutions and the creation of some agencies and departments should not be entertained.
He said the kind of expenditure cuts outlined under the fund-supported programme would impose restrictions on the growth drivers of the economy, which would also make it difficult to meet the programme objectives.
Under the IMF programme, primary expenditure would be reduced by two per cent GDP, mainly by lowering capital expenditures through project reprioritisation.
It also proposes measures to contain the wage bill by limiting wage increases and hiring, while rationalising spending on goods and services, among others.
“If you look at the expenditure cuts, you will see that we are cutting down on capital expenditure but Ghana has huge infrastructural deficit. So if you want to scale up, you need to spend more in the area of capital, other than that, you are running down your infrastructure,” the professor of finance said.
“What that will do in the medium to long term is that it will impose further restrictions on the growth drivers of the economy,” Prof. Bokpin stated.
Price to pay
On what individuals and businesses should expect, Prof. Bokpin said the populace must brace up for more hardship, bearing in mind that there was a price to pay if the country the International Monetary Fund (IMF).
While urging the populace to brace up for more hardship as the price to pay for the country to overcome the current economic challenges, the discussants stressed that citizen involvement in demanding accountable and efficient governance from public officials was the only means to alleviate the current economic challenges that have brought undue hardships on individuals, households and businesses.
The discussants made their contribution at the quarterly Graphic Business/Stanbic Bank Breakfast Meeting in Accra yesterday.
They are a Professor of Economics and Finance at the University of Ghana, Professor Godfred A. Bokpin; the Executive Director of the Africa Centre for Energy Policy (ACEP), Benjamin Boakye, and the Head of Corporate and Investment Banking at Stanbic Bank, Timothy Mugodi.
The event, the second in the year, was on the theme, “The current economic situation and you: what to expect, how to cope and how to thrive”.
The Chief Executive Officer (CEO) of the Ghana National Chamber of Commerce and Industry (GNCCI), Mark Badu-Aboagye, chaired the meeting.
Context
After 10 months of discussions and negotiations, Ghana finally received approval from the Executive Board of the IMF for a three-year budget support programme aimed at restoring macroeconomic stability and debt sustainability.
The extended credit facility (ECF), which would see the country receive $3 billion, is also expected to support structural reforms and help the economic recovery of the country after two years of economic challenges.
Ghana’s IMF programme is backed by the Post-COVID-19 Programme for Economic Growth (PC-PEG) which is the government’s blue print to address the economic challenges, restore macroeconomic stability, bring debt to sustainable levels in the medium term, support structural reforms, promote growth and ensure that the poor and vulnerable are protected.
Expenditure cuts
Prof. Bokpin reiterated that while some ministries could be merged, the appointment of Deputy CEOs for state owned institutions and the creation of some agencies and departments should not be entertained.
He said the kind of expenditure cuts outlined under the fund-supported programme would impose restrictions on the growth drivers of the economy, which would also make it difficult to meet the programme objectives.
Under the IMF programme, primary expenditure would be reduced by two per cent GDP, mainly by lowering capital expenditures through project reprioritisation.
It also proposes measures to contain the wage bill by limiting wage increases and hiring, while rationalising spending on goods and services, among others.
“If you look at the expenditure cuts, you will see that we are cutting down on capital expenditure but Ghana has huge infrastructural deficit. So if you want to scale up, you need to spend more in the area of capital, other than that, you are running down your infrastructure,” the professor of finance said.
“What that will do in the medium to long term is that it will impose further restrictions on the growth drivers of the economy,” Prof. Bokpin stated.
Price to pay
On what individuals and businesses should expect, Prof. Bokpin said the populace must brace up for more hardship, bearing in mind that there was a price to pay if the country wanted to come out of the current economic challenges.
“Oftentimes, we are uncomfortable when we talk about the price to pay for the kind of sustainable development that we want, but we must be willing to pay that price,” Prof. Bokpin stated.
“That price, oftentimes, may not be shared equally. Sometimes, the adverse effects may disproportionately affect other groups when you wish that the higher price would be paid by those who brought it upon us,” he added.
Accountability
Mr Boakye, an energy governance professional, stressed that the citizenry must meet the government halfway because “we looked on while bad economic decisions were being made, and although we spoke about them and wrote about them, we should have been harder on them.”
He explained that while the current economic challenges had driven the government to seek external support from the IMF, which would come with some uncomfortable conditions, it was incumbent on citizens to demand accountability, check wastage and insist that “governance works”.
Mr Boakye pointed out that the government over the years had been ineffective in the management of the economy which was saddled with corruption and inefficiency and had stifled growth, resulting in the current hardship.
“Corruption is massive in our procurement system and the government’s projects or bids do not go through competitive tender.
“Almost all contracts above a million won’t go through competitive tender but through sole sourcing and so we see that the government buys from the same market as everyone but at higher prices and we watch it happen,” Mr Boakye said.
Sustainability
For the country to become sustainable and avoid another IMF programme in the near future, Mr Boakye said policies and programmes of the government must be subjected to rigorous scrutiny to ensure value for money.
He regretted that the state had channelled a lot of public resources into unproductive ventures, resulting in zero value for money.
For instance, he pointed out, the government spent about GH₵250 million to construct irrigation dams in a number of villages with the promise that they would improve agricultural outputs and create value although almost all the dams remained nonfunctional.
“Most of the dams are not working, we generated zero value but people took money for the construction of these dams,” Mr Boakye said.
He stressed the importance of taking steps to avoid another IMF bailout because studies had revealed that every programme was more difficult than the previous one.
“If we are to avoid it, accountability must be demanded; citizens must demand accountability,” he said.
Sacrifices
Beyond the demand for citizens’ oversight on the conduct of public officials, Mr Boakye said there was also a need for lifestyle changes and adjustments to meet the present economic conditions.
“Where we are today is the doing of all of us, as we all failed in our role in ensuring that governance works for the people. We allowed the bad decisions to be taken and that is why we are here today,” he stated.
To him, as the government implemented the IMF programme, there were still some hurdles ahead for the economy, including an upward inflation trend, which might bring extra hardship on individuals and businesses.
He pointed out the reality that inflation would not drastically reduce, saying the government’s expectation to have “cost relative to tariff” meant that tariffs would continue to rise, and “when that happens it would affect the prices of everything”.
“We are in uncharted territories and a lot of sacrifices are required of us to pull off through the challenges.”
“So we have to change our lifestyles, adjust and programme our minds that things are going to be tough,” Mr Boakye added.
Difficult conditions
Mr Badu-Aboagye explained that businesses thrived in an enabling environment and suffered under harsh economic conditions, such as what pertained in the economy.
For instance, he said, the introduction of new tax measures was driving up inflation, which was inimical to businesses and stifled growth across all sectors of the economy.
“Inflation at the end of May was 42 per cent, and it is the third highest in Africa after Zimbabwe and Sudan, so businesses are consumed by taxes and taxes are driving up inflation”, Mr Badu-Aboagye said.
The GNCCI boss, therefore, called for measures to halt the fluctuations in the exchange rate, saying a cedi pegged at GH₵12 to the dollar was too high and not favourable for business growth.
Continue on page 39 for more stories from the Graphic Business/Stanbic Bank Breakfast Meeting.
SOURCE: GraphicOnline
