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Business News of Wednesday, 22 November 2017

Source: Isaac Adade-Boateng

Feature: Ken Ofori-Atta dangerously overconfident?

Finance Minister, Ken Ofori-Atta Finance Minister, Ken Ofori-Atta

Finance Minister Ken Ofori-Atta seems to be the beating heart of the ‘new Ghanaian economy’. He went to parliament and presented a ‘boastful budget’, saying the economy is working.

Ofori-Atta said on the floor of parliament: “We have turned the economy around and our policies are yielding results and bringing relief to Ghanaians. “I am glad to recall that we are on course to end the year with a fiscal deficit of 6.3 percent from 9.4 percent”.

“Overall, GDP grew by 7.8 percent as of June against 2.7 percent in the same period of 2016, and it is estimated to grow by 7.9 percent at the end of June 2017 – up from the original forecast of 6.3 percent,” he added.

The significant concern here is about Ofori Atta being too optimistic in his economic projections, when our fragile economy can falter or be threatened at any given time. We once witnessed good projections under the previous government, but the economy became flimsy in the long run before their exit.

This is an economy emerging from apocalypse, thus sounding as if all is well based on macroeconomic indicators which cannot actually reach out to the poor masses is bothersome. The overconfidence placed on an ongoing macroeconomic adjustment presents a real dismissal of the very poor walking dangerously on our streets in search of food or money for survival

Overconfidence can be subjective, based on one’s judgement; however, from a psychological perspective, people with privileged educational, social and economic backgrounds get ample ground to be overconfident.

In the minister’s instance, his overconfidence seems readily justified when considering the fact that all economic indicators are gaining good standing, while international bodies are also okaying our economic growth.

However, there is no glaring evidence that the indicators will stand the test of time – or will reach downward to about 2.3 million very poor Ghanaians. Ofori Atta’s overconfident posture in his governments’ ability to turn the economy around suggests a personal belief in our failed institutions that may ultimately turn out be unfounded.

The 2017 budget, which projected 750,000 jobs being created under the ‘Planting for Food and Jobs’ programme was not mentioned. We are yet to know the number of people employed under it so far. We do not know how many got jobs and how successful it is for now.

It is unclear to what extent the minister is aware of what the prior government’s economy went through, and how flaunting their confidence in the media backfired beyond their imagination. The previous government’s confidence in the economy was badly affected by an unexpected oversupply in global oil output, which pushed down prices drastically.

The economy hasn’t been diversified, and its over-reliance on oil, cocoa and gold prices makes it fragile. For years now, issuing bonds has been our trusted source of revenue. The new government has been doing the same as the last one, but to a lesser degree.

It is highly possible that the new government may be operating on the assumption that global prices for our commodities will remain the same and all is well. The old government thought the same but got hit by reality.

We will one day see the full implications of Ken Ofori-Atta’s confidence when the economy gets held up in exogenous economic turbulence that militates against the impatient masses.

In sum, Ken Ofori Atta being successful and saving Ghanaians from the worst of what we experienced in 2016 will be well-appreciated, but we want to avoid a premature sprint for glory while there’s a chance of any economic challenge leaving us all in the dark once again.