Economic Crisis Management By NPP....

SSNIT forced to buy ?280bn CPC shares!
As a result of the suspension of the country?s assistance programme with the IMF due to the NPP government?s abysmal handling of the economy, a direct result of its flirtation with the phantom ?IFC? with its consequent disappointment and embarrassment, as well as the unprecedented over-expenditure by the government, it appears confidence in the economy has reached its lowest ebb.

Concrete evidence of this loss of confidence is shown in the very low patronage of the public floatation of the shares of the Cocoa Processing Company (CPC), one of the conditionalities required to be met by the government to qualify for a continuing programme with the IMF.

The low patronage of the CPC shares compelled the period of the public share floatation, to be extended by one month. At the end of the one month, the shares were still unsold, or, is it ?unbought??

In its desperation, the NPP government has resorted to another unorthodox measure that is bound to create more problems for it. The government ordered the SSNIT to buy the unsold shares of the CPC.

So on Thursday 28 November 2002, the Board of Directors of the SSNIT met and approved for SSNIT to purchase ?280bn worth of CPC shares, not because it is a strategic or wise investment, but in order to satisfy the IMF conditionality for the sale of the CPC shares by the end of the year.

The SSNIT Board also agreed to provide the government with a $6.5bn or ?65bn bridging loan as replacement for the European Union (EU) budgetary support pledge of the same amount that has been cancelled on account of the government?s inability to fulfil the IMF conditionalities and to maintain its programme with the Fund.

All these measures have been taken against the background of President Kufuor?s promise when he assumed the Presidency that his government would never use SSNIT resources for budgetary support.

Economic analysts consulted by the Ghana Palaver have expressed grave concern about the SSNIT Board decisions. They are concerned about why a state owned enterprise (SOE) with 100 per cent government ownership should be allowed to buy such large shares in what is supposed to be a public floatation to raise money from the private sector.

They have also raised concern about what in effect amounts to mortgaging the future of Ghanaian workers by committing their life-long savings and future pensions to such large and risky investment.

?What if the share prices of the CPC should fall?? one analyst asked, making reference to the share floatation of the Ashanti Goldfields Limited which were sold for about $26 per share but which are now selling for about $3 per share. ?It would mean that workers? interests have been mortgaged,? the same analyst answered.

Some also believe that this government/SSNIT stratagem amounts to a deceit of the IMF in that it circumvents the agreement to divest the CPC shares to the public in order to inject private capital into the company. But what has happened amounts to the government injecting more of the government?s own capital into a company that is already owned by it. It entirely defeats the purpose of the divestiture.

In similar vein, the analysts expressed concern about the ?bridging facility? of $6.5m extended to the government by the CPC since they believed that the amount could equally add to the recapitalisation of the company.

They expressed fear that as with similar situations in the past, when the government ?borrowed? foreign exchange from SOEs, such ?borrowings? were never repaid and remained perpetual debts on the books of the affected SOEs. As in the matter of the enforced purchase of the CPC shares, it also means mortgaging the interest of workers.