EDITORIAL: Those Who Sow The Winds…

The Bank of Ghana recently catalogued the gains of the Ghanaian economy as a result of the New Patriotic Party (NPP) government’s commitment to a programme of reforms.

BOG’s first Deputy Governor Emmanuel Aseidu-Mante who listed the government’s economic achievements at the commissioning of the refurbished headquarters of the National Investment Bank (NIB) in Accra, ascribed them to the NPP government’s “strong commitment to a consistent programme of reforms” And the achievements look quite impressive on paper:

According to Mr. Aseidu–Mante, the programme of fiscal consolidation that was put in place at the beginning of 2003 and which has been implemented vigorously, had been complemented by an upturn in our terms of trade, improved domestic revenue mobilisation and expenditure cuts.

The beneficial results, he said, has been the lowering of inflation, stable exchange rate regime and high foreign reserves accumulation.

In his reported words: “The twelve month consumer price inflation, for example, has fallen from a peak of 30% in March to 24.6 % in October. This improvement in price stability is the result of a fiscal and monetary policy framework that resulted in significant tightening and reduced domestic borrowing from the public sector.

“Reserved money declined 1.3 percent (?75.9bn) in the first 10 months of 2003 compared with an increase of 6.1% (?247.2 bn) in the corresponding period of 2002.

“Similarly, broad money (M2x) growth declined from some 50.0 percent in December 2002 to 35.5 percent by September.

“The Ghana Stock Exchange, for example, continued its strong performance through the third quarter of 2003 with the All-Share Index, the main gauge of the Exchange, posting a return of 107.8 percent (1503.7 points) at 2,899.03 points compared with an increase of 40.2 percent (388.8 points) during 2002”. Apparently wishing that Ghanaians benefit from these gains, Mr. Aseidu-Mante, urged the banks to “translate these macro-economic gains into lower lending rate and lower tariffs” to encourage “greater use of the banking system” in economic transactions.

As pointed out above, the Gye Nyame Concord finds these positive indices impressive and the government chalking them deserves the commendation of all well-meaning Ghanaians.

We all also agree with the Bank of Ghana that these gains ought to reflect in the pockets and general well being of the people.

The question that arises, however, is why the banks need to be appealed to in order for them to lower their rates, since a greater use of the banking system would increase their profits?

Gye Nyame Concord believes the answer may not be far-fetched: it is simply because the banks have doubts over the authenticity of some of the figures being bandied about.

And both the government and the Bank of Ghana are to blame for the situation. This is because they colluded to discredit the integrity of the Ghana Statistical Service (GSS), the state agency solely responsible for generating our Consumer Price Index (inflation)

The discrediting of the GSS, which had no basis whatsoever in truth, happened, early March this year when the NPP government ate its cake and undeservedly insisted on having it, in the wake of the astronomic increases in petroleum prices from ?10,000 per gallon to ?20,000 .

The increase, which some claims was far above the figure recommended by the IMF, regressed the twelve-month CPI from 16.1 percent as at the end of February 2003 to above 30.5% for 2003.

In an act of cowardice and irresponsibility, the government shifted from the twelve-month inflation figure which it had used since assumption of office in January 2001 to the monthly CPI which was about 16 percent When the government and the BoG were challenged, the then Planning and Regional Integration Minister, Dr. Paa Kwesi Nduom, followed later by Finance Minister, Yaw Osafo-Maafo, got up to all sorts of convolutions as to why the CPI calculated by the GSS could not be relied upon: obsolete equipment, lack of trained personnel etc.

As far as the Gye Nyame Concord is aware, nothing much has changed at the GSS since its CPI for March 2003 was publicly rejected by the NPP government, in terms of the reasons that the government used as a basis for the rejection. So it is in the interest of their owners for the banks to use a long spoon in dining with government’s statistical figures.

If the GSS is unreliable, what is the source of the 30 percent CPI which Mr. Aseidu-Mante said had reduced to 24.6 percent as at October 2003? Gye Nyame Concord calls on the government, in its own interest, to publicly restore the credibility of the GSS; and it must be done today. Otherwise, it should not complain when the people look in a direction opposite to the one that it points out to them.

“Once bitten, twice shy” and other such aphorisms may have become clich?s, but they are still words of wisdom, and profoundly so.