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Opinions of Saturday, 11 July 2015

Columnist: Al-hajj

Terkper Shames Prof Kusi, Ifs et al (1)

IFS' Doom Prediction Of Economy

Terkper Shames Prof Kusi, Ifs et al (1)

-As IMF Clears Ghana


When The aL-hAJJ recently admonished the immediate past Finance Minister and Founder of the HODA Group, Dr Kwabena Duffuor not to allow his enviable and hard earned reputation to be dragged in the mud by the vindictive conduct of his former economic advisor; now Executive Director of his newly established think tank, Institute of Fiscal Studies (IFS), Prof Newman Kwadwo Kusi, little did we anticipate it to begin so early and so fast.

After weeks of close monitoring of the reason(s) behind the establishment of Dr Duffuor's otherwise laudable apolitical independent non-profit think-tank, IFS, which it managers say is devoted to the provision of economic policy advice, advocacy and world-class training base on practical experience and insights developed through quality research and analysis; the real wicked intent, dangerous activities and nauseating conduct of its Executive Director, Prof Kusi, need not be overemphasized.

This paper, following these observations in our April 30, 2015 edition, sounded a note of caution to the venerated and genteel former Finance Minister and shrewd entrepreneur to take cognizance of the functions of the IFS and the spiteful conduct of its head, less, he (Dr Duffuor) would have himself to blame in future.

Since its establishment about two years ago, the Executive Director of IFS, Prof Kusi, who was former economic advisor to Dr Duffuor when the latter was Finance minister under the same ruling National Democratic Congress administration, has never missed the opportunity to run down current Finance Minister, Seth Terkper (who ironically was one of Dr Duffuor's deputies), and by logic, the Mahama government of its management of the nation's economy.

Obviously obsessed with cutting Terkper and the Mahama government into shreds under the guise of carrying out economic research and analysis, it will be recalled that Prof Kusi, as usual at his hatchet best, ahead of IMF’s review of the Ghana's program, excitedly predicted that the country will fail in meeting all targets agreed with the Fund.

He was quoted by Daily Graphic to have emphatically stated that “in its current form (Ghana's economy), I can tell you that by the next review, the government will slip. There is no way the government will be able to meet the conditions. I’m wondering how the government is going to cut public wage bill, for instance, because it can neither reduce the salaries of the workers, nor can it muster the political will to downsize workers in the sector. It appears that right from the word go, the IMF itself is not sure of the government’s commitment and ability to implement the programme.”

Not even the favorable report by the IMF that Ghana's economy, under the guidance of Finance Minister Seth Terkper and the government economic management team, achieved all set targets save, the ceiling on the central bank’s financing to the government was missed by a small margin, will make the head of Dr Duffuor's IFS and his ilk such as IMANI Ghana and self-acclaimed economic gurus of the NPP swallow their empty pride.

Speaking immediately after the release of the IMF’s clean bill of health at the Economy Ghana Network’s forum at ISSER on Ghana’s fiscal challenges and the IMF bailout, Prof Kusi, instead of being apologetic for his doomsday verdict on the Ghanaian economy, once gain questioned the country’s ability to attain the GDP and deficit targets set with the IMF.

The IFS boss, whose stock in trade is to always dwell on the negative sides of the economy under the Mahama administration, argued that the IMF bailout program for Ghana “needs to be reviewed or re-adjusted,” insisting that sticking to the program in its current form will be problematic unless the macro-economic fundamentals are improved tremendously.
He maintained that it was contradictory for the IMF to insist Ghana undergoes strong front loading fiscal management policies and expect the economy to grow.

Prof Kusi also stressed that it is unrealistic for one to expect that donor funds will flow just because of the IMF program, saying “donor partners think there is too much corruption and fiscal irresponsibility and until that is changed, very little donor funds will come in.”

Ghana's economy since 2013 when John Mahama and Seth Terkper took charge as President and Finance Minister respectively, has come under stressful challenges, amidst rising inflation, a fast depreciating currency, high budget deficit amongst others, compelling government to turn to the IMF.
Suffice to state that, it was under the watch of Prof Kusi and his boss, Dr Duffuor that Ghana achieved its best, and at the same time, worst economic performance in recent times. Between 2010 and early 2013, the country recorded the longest single digit inflation (32months) and capped it up with an unprecedented growth rate of 14% in 2011.

However, between mid 2012 and first quarter of 2013, under the supervision of this same Dr Duffuor and Pro Kusi, Ghana's economy took a nosedive, largely due to a combination of unfavorable global factors and domestic challenges, hence the economy came under severe stress in the last quarter of 2012, leading to double digit fiscal and external current account deficits

Inflation, which stood at single digit for about 32 months, suddenly begun to soar with its corresponding rise in interest rates. The poor performance of the economy under the former Finance Minister and his economic adviser, was attributed to huge arrears and high budget deficits of nearly 20 percent in real terms.(We will dilate on that in part 2).

Meanwhile, The aL-hAJJ is presently digging into mind-boggling expenditures which were occasioned in the last and first quarters of 2012 and 2013 respectively, including payments on holidays. They included purported promissory notes issued to some selected banks on behalf of some prominent business entities.
Stay tuned.