Funding Cocoa Purchases From External Loans Is Failure And Not Success - CPP

The Ministry of Finance and Economic Planning (MOFEP) has signed a syndicated loan of US$ 1.5 billion on behalf of Ghana Cocoa Board (COCOBOD) for the purchase of the current crop of cocoa. The Ministry in a statement to mark the occasion commended itself on what it called an exemplary feat in the management of our economy. It argued that the loan agreement was indicative of the good economic development management performance of the Ministry. The ministry the statement said had exercised fiscal discipline and defied the bug of reckless and unfruitful expenditure that has enabled the economy to retain the single digit rate of inflation of 9.5% even in an election year.

We wish to note that the argument and statement of the Ministry is not only frivolous and disingenuous but a slap in the face for Ghanaian development.

Firstly, the question many would ask is “who deserves commendation? - The marketing officers of the investment banks who sold their funds for profit and increased their incentive earnings or the hapless buyer who got an expensive loan?

Secondly, we must point out to the Ministry that the bankers did not arrange the sale on account of Ghana’s inflation rate but because the price was right; inflation rate notwithstanding. They have gained at the expense of the Ghanaian Tax Payer and Ghana’s development.

Thirdly, it is undeserving for the ministry to demand commendation for its inability to manage the economy in a direction that would have enabled us to finance the purchase of our cocoa from our own resources. It is the result of their evident failure in this regard that we have to resort to external borrowing that involves the transfer of interest payments overseas. We point out that the external borrowing of funds for cocoa purchases was not known under the CPP Government. Cocoa been Ghana’s main economic backbone the CPP had put the system in place of buying all cocoa from farmers, selling to overseas companies at a profit to the nation and using the money to develop Ghana - scholarships, water and sewage and other social infrastructure of roads, electricity, hospitals, schools etc.

A pre-export finance facility from a syndicate of 31 banks from 17 countries in Europe, America and Asia. which could mean interest payments of $150 to $300million per year, and thus depriving Ghana of millions for development is not the scenario the CPP planned for Ghana.

It is an economic and financial descent for which our Ministry of Finance and Economic Planning is seeking commendation; they want us to pat them on the back for engaging in a reckless, selfish and wasteful expenditure.

The CPP assumes that MOFEP’’s “fiscal discipline” means the country has funds that they are holding on to and thus urge them not to hold on to the funds if they have it, but spend to create jobs as expenditure cuts, austerity measures and single digit inflation has not achieved the desirable objectives of job creation, industrialisation and increased agricultural production that leads to a constant supply of food at affordable prices for ordinary citizens and agricultural raw materials for our manufacturing entities that are dependent on them.

This is a position supported by a UN Agency - United Nations Conference on Trade and Development (UNCTAD) in its just-published Trade and Development Report 2012. UNCTAD says:

“As predicted by UNCTAD economists, fiscal austerity and wage compression are further weakening growth in developed countries without achieving the expected results of reduced fiscal deficits, job creation, and renewed confidence of financial markets.”

The situation applies to Developing countries.

The Ministry when it delivers self-financing of Cocoa purchasing and measures which lead to industrialisation and create jobs would then have deservedly earned our respect and commendation.

Ghanaians are discerning under the guidance of the CPP, the social conscience of the nation, the true nationalist party with a development policy guideline that is founded on the history of our nation. The CPP will not applaud failure. The CPP will do a better job.

Ghana Must Work Again ………….Yabre !!!!

Nii Armah Akomfrah Director of Communication www.conventionpeoplesparty.org