A few months ago, during a lecture I gave to students at the Kwame Nkrumah University of Science and Technology (KNUST), I made a statement that the supposed fiscal consolidation that the government claims to be taking place following the implementation of the IMF program over the last two years is not credible.

Developments since then have only reinforced this view and today it is now much clearer that the Ghana’s fiscal consolidation under the IMF program is actually a sham.

We should recall that the economy ended in 2012 with a fiscal deficit of 12 percent of GDP, 11.7 percent of GDP in 2013 and 11.9 percent of GDP in 2014. This was the first time in Ghana’s history that double digit fiscal deficits were recorded for three consecutive years and demonstrated the deep fiscal hole that Ghana’s public finances had plunged into following the reckless increases in public expenditure during the 2012 election year and subsequent years. This poor state of public finances, weak policy implementation and lack of policy credibility ( as adduced by the Government) resulted in Ghana requesting an IMF bailout in August 2014.

When Ghana received an IMF bailout, there was a clear expectation that the process of fiscal consolidation (a sustained decline in the fiscal deficit/GDP ratio) would take place. This, after all, is what IMF austerity programs are supposed to achieve.

The decline in the fiscal deficit is supposed to bring down inflation, improve debt sustainability, help lower interest rates to support private sector activity, crowd-in the private sector, increase investment and above all increase economic growth to help create jobs and alleviate poverty. It was therefore not surprising when the Government of Ghana reported that after some two years of implement the IMF supported program, the process of fiscal consolidation was taking hold with a dramatic decline in the fiscal deficit/GDP ratio dropping from 11.9 percent in 2014 to 6.7 percent in 2015.

Indeed, the first and second reviews by the IMF of Ghana’s program also suggested that the process of fiscal consolidation was taking hold and on track. The IMF appeared eager to report the success of its program which many questioned. More clearly the public struggled to reconcile the IMF’s statement on ‘an on-track and improving macroeconomic outturns’ with the actual economic hardship that the public was experiencing.

The only problem, however, is that what Ghana is experiencing is a unique type of fiscal consolidation which has defied all expectations. Ghana’s fiscal consolidation is apparently taking place in the midst of public debt levels rising to unsustainable levels, inflation is stubbornly high and is currently the second highest in Africa at 18.2%, the rising blackhole of State Owned Enterprise (SOE) Debt which together with the debt owed by the government to the BDCs and the lack of adequate supervision of micro-finance companies can potentially collapse the Banking system, rising interest rates, crowding out of the private sector, increased banking sector fragility, reduced business confidence, and declining economic growth.

The Ghanaian experience, under this NDC government, is exactly the opposite of what Fiscal Consolidation is supposed to achieve. Fiscal consolidation is not the end itself but only a means to an end. Ghana’s apparent fiscal consolidation is however beginning to unravel with clear indications that the government may have misrepresented the facts in providing fiscal data it has been presenting on the basis of which the markets and international financial institutions make their assessments and decide to lend.

After the IMF staff visit in April 2016 for a third review of Ghana’s program, there was a clear expectation that the review would be presented for IMF Board approval by June 2016. This did not happen and we are still not yet clear whether Ghana will go to the Board in July 2016. A recent media report, quoting sources from the IMF, indicates that no board date has been set as the IMF has stated that it has not concluded the third review of Ghana’s program. Amongst the reasons for the non-conclusion of the third review is the IMF statement in response to media questions that the fiscal data for 2015, which provided the basis for the positive assessments of the first and second reviews, is yet to be “reconciled”.

Do we really understand when the IMF begins to talk about reconciling data? This is code phrase or euphemism for the fact that ‘data is likely wrong’. How can 2015 fiscal data not be reconciled by July 2016? What is so complicated about it? What this points to is that the government is not coming clean on the fiscal data. When the IMF begins to do this, three things could be happening. Either the fiscal deficit has been wrongly reported, arrears have been accumulated which the current program does not allow, or debt numbers have been wrongly reported. The reason why arrears accumulation is a likely explanation is the report about rising non-performing loans in the in the banking sector as a result of debt not being paid by the public institutions which is being driven by governments inability to pay its debt to these institutions like the ECG, TOR, VRA, etc. Where are all these unpaid debts recorded in our fiscal accounts? Obviously arrears are being accumulated and sooner or later the real picture will emerge.

What has heightened our suspicion on the fiscal data is the cue we are picking up from the Bank of Ghana. For the first time since 2002, after 71 MPC press releases, the Central Bank failed to report on fiscal developments last week, a confirmation that something is very wrong. The MPC makes an assessment of the economy and makes a decision on the positioning of the interest rate without an assessment of the public finances (the fiscal data). The statement cannot be taken seriously if it is does not take account of the state of public finances. Clearly, I cannot believe that the MPC and the Bank of Ghana (which is in possession of at least the narrow fiscal data) would undertake an assessment of the economy without critically assessing the fiscal data, and report to the public in the spirit of transparency. It was therefore very curious that the MPC statement did not contain even one line relating to the state of Ghana’s public finances. This must be the first time in the history of the MPC that this has happened, an unbelievable development. If the MPC did consider the fiscal data then the question is why it avoided any reference to fiscal developments in the press release? What is the government trying to hide? Is the government trying not to scare away foreign investors on the eve of the issue of the illadvised Eurobond in 2016?

Is expenditure already going beyond set targets in 2016 just as happened in 2012? The government should be careful not to compound the problems of this economy, which it caused starting with a major spending binge in the 2012 election year, with another spending binge in this 2016 election year.

Then again, this John Mahama led NDC government may just be setting the stage to deliberately or technically abrogate or suspend the IMF program to give it the space to go on another spending binge for the 2016 election as they did in the 2012 election year.

To allay the fears of Ghanaians and the financial markets, the government should publish the fully reconciled fiscal data for 2015 and the first half of 2016 immediately. The lack of transparency is undermining confidence in the economy. This NDC government is simply not being honest with itself, the good people of Ghana, the IMF and the international community about the state of Ghana’s public finances. We need a real accounting for the money.