Economic Forum bemoans lack of bold measures to address financial crisis

DANQUAH INSTITUTE PRESS RELEASE

DI 100 DAY EVENT:

Speaking today at the Danquah Institute’s symposium on Mills’ first 100 days, Kwaku Kwarteng revealed that in 2009 Ghanaians are set to face a worrying combination of an increase in prices as well as a decline in real wages. In the first quarter of 2009, prices rose by 20.2%, whilst the nominal public sector wage increase of 11.2%. This will thus cause a reduction of 3.6% in real wages when inflation is taken into account. If the current rate of inflation persists, real wages will experience a reduction of 7.5%.

In a factual address backed up by the latest statistics from the Bank of Ghana and 2009 Budget, the former Government Spokesman on Finance analysed the economic state of the nation and concluded that regrettably there is not much in the Mills adminstration’s 2009 economic policies to check rising prices on the market, stating: “You don’t get the bold interventions that would arrest the situation in the economy.”

Turning to the way forward, the NPP Communications Director made some economic policy suggestions including exploring more domestic sources of revenue, begin domestic saving, enforce tax administration, and acting on divestiture. He highlighted the case of the Tema Publishing Company that is still on divestiture, and posed the question: “Will Mills’ administration have the confidence to do it?” sadly concluding: “I doubt it.”

Mr Kwarteng was the last speaker in the Danquah Institute’s Economic Forum, following addresses by Dr Yao Graham of the Third World Network and Sampson Akligoh of Databank.

Dr Graham stated the importance of looking at the first 100 days of the new administration in the context of the wider domestic and international situation, as well as the historical background.

He welcomed the government’s announcement of its commitment to fighting corruption in public spending, whilst saying it was too early to make any judgement of where this is going. He also singled out Mills’ embracement of the concept of justifiable continuity in government in his State of the Nation Address as notable, but questioned what this really means.

As befitting the head of a pan-African research and advocacy organisation, Dr Graham also made a strong appeal to the Government to ensure national stakeholder consultations are just that – national forums for national actors to reach national decisions. This is particularly important with regards to that on the Economic Partnership Agreement, because, according to Dr Graham, the decision whether or not to sign this will probably be the most important the Mills’ administration will take.

He went on to recommend a restoration of taxes on food imports, a review of the central banks’ role to look beyond current narrow focus, and called for “a bit more from Mills’ government setting out state interventionalism in certain sectors.”

Databank’s economic analyst Sampson Akligoh outlined the context in which there is a need for urgent and bold action from the government.

He delivered the grim but important news that: “Inflation shocks will definitely increase poverty, and government needs to look at impressive ways of dealing with this.”

Welcoming the attention to agriculture, he nevertheless stressed the need not to lose interest in other sectors of the economy.

He also recommended the government “enact policies radically to protect our economy from external shocks” as well as introducing taxes to encourage food production.

In a question from the former Finance Minister Osafo Maafo during the discussions after the panellists’ presentations, attention was drawn to a grave mistake in the budget in which the deficit is stated to be 14.9%, which in fact including divestiture receipts (which is a standard inclusion) is 11.5%. The gravity of this could not be overstated according to Mr Maafo, who described it as “One of the most harmful statements ever made in a budget” and one which “undermined the whole economy.” He went on to concur that the Budget was disappointingly timid and “fails woefully to proscribe very bold measures.” For further information please contact Nana Attobrah Quaicoe on 0244928999