Opinions of Monday, 1 April 2019
Columnist: Pearl Asomaning Kamajou
The announcement that Dr. Mahamudu Bawumia is to deliver a public address or perhaps by his own style we may call it a ‘lecture’ on the state of the national economy on the 3rd of April 2019 has only succeeded in reinforcing the growing suggestion that he is fit perhaps only for classrooms and lecture halls and not the world of politics and governance.
But this time it looks more serious. He is addressing Ghana’s parliament on the state of the economy—and to be clear everyone knows and ‘feels’ the state of the economy; its only cooler than the bottom of hell.
It seems clear the New Patriotic Party (NPP) Government is still on a campaign trail and has not seriously settled in Government. Despite the economic difficulties, mass destitution of the youth, growing graduate unemployment and the scourge of violent crime, the Chairman of the National Economic Management Team has only to offer ‘lectures and tutorials’ on economics—that is to be expected.
Over the years Dr. Bawumia has earned the accolade of financial wizard.
However, this accolade is drowning in the sea of reality for the one reason that he is now the manager of the economy.
In 2016 this kind of lectures, although did not raise fundamental and critical issues could be tolerated as legitimate opposition campaign tactics. However, Dr. Bawumia must be capable to understand that the NPP is now in power.
As at now ‘dumsor’ is rearing its ugly head, wearing the cap of official lies about the energy situation in the country.
A few months ago the service providers in the utility sector shocked the country to the bone with a proposal to the Public Utility Regulatory Commission (PURC) for a 45% tariff increment.
The main reason for this was not that the service providers (water and electricity) were making operational losses, but rather financial losses due to the skyrocketing of the US Dollar against the GH Cedi.
This situation betrays the precarious state of the national economy and hopeless situation of the Cedi. Dr. Bawumia recently stated that he will arrest the decline of the national currency; but how many times has he not said this? In 2015, 2016, 2017, 2018 and now 2019—both at the time in opposition and in government.
Now the budget projections illustrate a crucial aspect of the crises. The budget was planned with the expectation that the US Dollar will average 4.8 GHC or even less. Now the US Dollar is almost 5.5 GHS.
International finance assessment firm, HSBC has projected that the GH Cedi will depreciate further to as low as 6.3 to the USD by the end of 2019.
What is making the situation worse is public financial policy failure. Why would an independent central bank despite the depreciation of the GH Cedi decrease the monetary policy rate? And at a time when the commercial banks have been forced to increase their base capital; thus creating high liquidity in the economy?
Worse still, Government through the Ghana National Petroleum Corporation (GNPC) --this is constitutionally questionable in the first place-- is borrowing almost $250 million for the Ministry of Energy using oil reserve as collateral in contravention of the Petroleum Revenue Act 2011.
It will seek to borrow hundreds of millions of dollars this year through sale of bonds. The point is that since these loans are not being invested in the productive sectors—some of it to pay salaries and the provision of KVIP toilets nationwide --how is the Government going to manage to repay?
The effect on the cost of living for the people of Ghana, will be devastating. I may need not to mention the obvious effect on fuel prices. Ghanaians are simply going to pay for ‘economic mismanagement’.
Now there is a bigger issue here. The fundamentals of the economy. It is important to note that there can be no meaningful economic take off if the social and economic infrastructural deficit is not addressed.
President John Mahama sought to do so by contracting foreign loans. This was met with harsh criticism from Dr. Bawumia in a public lecture at the Central University College.
Now the NPP Government has resulted in borrowing even more loans in two years but with nothing to show for.
Also after the big talk of President Nana Akufo-Addo to transform the economic structure from the “Guggisberg” economy, the economy has not changed any way apart from the deliberate collapse of banks and throwing of tens of thousands of graduates into the street.
Today, Ghana’s Cocoa revenue can only pay for imported rice, chicken and canned tomato paste. Things have become worst than ever before, and noting the direction which the economic and political policy is being driven it seems nothing is going to change.
On the 3rd of April, I know the well-rehearsed address of H.E. Alhaji Dr. Mahamudu Bawumia will surely win the admiration of his boss and a few power brokers of the NPP establishment.
But for ordinary Ghanaians, their expectation and hope for the announcement of bold and pragmatic measures that will relieve the growing hardship from their backs, unfortunately, may be as likely as finding palm trees in Alaska!