On the economic front, Nana Addo and the NPP pledged to transform Ghana within 18 months, grow our economy at double-digit, reduce borrowing, ensure fiscal discipline, bring down the cost of living, lower taxes and protect the public purse. They promised to move Ghana “from taxation to production.”
In effect, none of these has been achieved. Instead, Ghanaians have been subjected to excruciating hardships and deprivation resulting directly from the mismanagement of the economy by a government that lacks the humility to accept responsibility, and the capacity to appropriately diagnose the root causes of the challenges that have brought us here.
Rather, they constantly seek to impose on us, their version of the economic reality-denying that food prices have gone up; insisting that the business climate is favourable; virulently protesting the evidence that their investments in meaningful capital expenditure is insignificant; and ignoring glaring evidence of unprecedented levels of corruption and breaches of internationally acclaimed standards of social justice.
This government contests even the most basic and glaring set of facts. This should never have been the case for a government that has been fortunate to receive far more resources in the last five years than almost all governments before them under the fourth republic, put together.
At the last reckoning, over GH¢ 500 billion had been available to them through taxes, grants, borrowing and other sources of revenue. No government in our recent history has been that fortunate.
Despite this fortune, today, the Ghanaian economy ranks among the worst managed in the world. It is characterized by unsustainable public debt due to an unprecedented fiscal deficit, comparatively high and still rising inflation, a rapidly depreciating currency, spiraling cost of doing business, ever rising cost of living, high levels of corruption, abuse of civil and human liberties, and a general loss of investor confidence. Simply put, our country is on the verge of bankruptcy.
In spite of the firm promise to reduce borrowing, this government has increased our public debt to almost GH¢ 380 billion as of the end of the first quarter of 2022. This is more than three times the debt of all governments since the days of Osagyefo Dr. Kwame Nkrumah up to January 2017.
A direct consequence of this astronomical borrowing is that our debt service obligation per annum has increased by 500% from GH¢10 billion in 2016 to about GH¢50 billion now. We are at great risk of defaulting on our debt repayments unless something drastic is done.
To be clear, despite the heavy politicisation of debt by the current administration while in opposition, the real problem we face is not just because of the daunting large size of the debt value. Rather it is the stark reality that these huge levels of borrowing have not gone into infrastructure and capital investment but have been applied, largely, to consumption, and in some cases even misapplied.
This heavy borrowing has not been met by a commensurate and significant improvement in the size of the economy to ease repayment of the debt in future.
My brothers and sisters, an important and yet very disturbing variable, often ignored in our national discourse about the debt situation, is the corresponding ballooning of government indebtedness to local businesses and other statutory bodies including SOEs.
These issues must occupy an important space within national discourse because our estimation is that government’s liabilities to local businesses and other stakeholders exceed GHC30 billion.
Arising directly from the excessive borrowing to fund consumption related expenditure is the harsh truth that, more than half of what government collects in taxes is used to service debt with the remainder going almost exclusively into public sector wages. This has created self-inflicted rigidities that leave very little space for investment in other important areas of the economy.
The effect of this, is that government is unable to meet its spending obligations in the most critical sectors of the economy on which the livelihoods of millions of our people depend.
It is little wonder therefore that out of a total of annual collection of GH¢ 2.1 billion under NHIL, as at end 2021 only GH¢ 127 million (about 6%) had been released to the Authority.
This is stifling the ability of health care providers in the private and public sectors to provide adequate care for the mass of our people.
My brothers and sisters, in the hands of a more responsible and prudent administration, the resources that have been available to this administration, should have resulted in quantum leaps in the standard of living of Ghanaians and we should have recorded major progress as a nation.
After inheriting a stable economy that was programmed and poised for rapid growth from early 2017, this government has squandered its way into a ditch from which it has become impossible to emerge without imposing even deeper hardships and suffering on Ghanaians.
The minimum expectation was that the NPP government will build on the strong foundation that had been bequeathed them and achieve incremental progress over what they met. They have instead carried out a demolition exercise of that foundation and left our economy in quicksand, sinking at an alarming rate.
However, now we know, that responsibility and prudence are not concepts that appear to be appreciated by this government.
As we speak, the cash crunch arising out of the rigidities in the economy is having a devastating toll on almost all sectors of our national life.
Take the education sector for instance.
At the basic level,
- Capitation grants have been in arrears for nearly a year.
- Textbooks have not been supplied to basic school pupils for three straight years
At the SHS level,
- Lengthy delays in the release of funds have crippled the Free SHS program compelling key stakeholders like CHASS and GNAT to issue ultimatums to government
- There have been widespread reports of food shortages and nutrition deficient, poor quality food in schools across the country and,
- The academic calendar has become erratic due to non-availability of funds to run the schools
At the tertiary level,
- UTAG recently ended a protracted strike action to call on government to honour its commitment on salary rationalization and better conditions of service. The UTAG strike severely undermined teaching and learning on our various campuses
- College of Education students have spent more time at home than in school because of the lack of funds and;
- Trainee allowances have been in arrears for several months amidst threats by school authorities to shift the cost of feeding unto students in the absence of timely release of funds by government.
The government’s mismanagement of the GETFund has not helped matters in the education sector.
Similar liquidity challenges permeate all sectors of the economy. Elsewhere, the District Assemblies Common Fund still stands in arrears of several quarters – endangering our accumulated mileage in local government administration.
LEAP beneficiaries who depend on a very meagre quarterly stipends for survival have also in recent times been denied access to these payments for many months, condemning them to intense and perilous hardships.
As I said earlier, NHIS service providers are owed several months arrears and are sparingly paid for their service. This is due to the illegal diversion or misapplication of attributable funds.
Related to this is the reckless collateralisation of various funds to satisfy current consumption needs, and worse of all is the government’s express desire to collateralise more of such funds:
- They have collateralized ESLA till 2035,
- They have collateralized almost GH¢10 billion of GETFUND revenue through the 7-year Daakye bond and
- After mortgaging all the family property, they are desirous of selling off the remaining family cutlery by collateralizing our mineral Revenue through the dubious Agyapa Deal.
- And it is expected that they are in the process of collateralising the revenues from the recently implemented E-levy.
Countrymen and women, yesterday at the May Day address, the President stated that it is not possible to remove taxes off petroleum products because it will result in an inability to pay public sector wages. What he did not tell workers was that some of those taxes cannot be removed because they have been collateralized and the money has already been spent.
ESLA when it was introduced had a 5-year lifespan to pay down legacy energy sector debts. Today ESLA cannot be removed as a petroleum tax because this government has spent the money upfront and has collateralised ESLA till 2035.
This entirely unwholesome practice of concealing debt through the collateralization of statutory funds for the contraction of loans must be curtailed. Hidden debts have never helped anyone let alone a nation.
Hidden debts will catch up with you as it has the effect of increasing the public debt while creating a false sense of security because those debts ostensibly sit on the books of state-owned enterprises or special purpose vehicles.
For example, whereas the Bank of Ghana in its latest Summary of Economic and Financial Data pegs our public debt at GHS 351.8 billon with a debt to GDP ratio of 80.1% at the end of 2021, the actual debt stood at GH¢362 billion when you factor into the equation, debts sitting in the names of GETFund, ESLA, and Sinohydro.
Thankfully, the strong will of the people, civil society and the NDC legislators applied the brakes to the Agyapa Deal. We must be determined to defeat the Agyapa Deal if they resurrect it – This can only be the actions of an ‘Agya boni’ and not an ‘Agya pa’.
This grim economic situation has inevitably caught the attention of the global investor community and rating agencies leading to a total loss of confidence in our economy.
Due to this loss of confidence – confirmed by our worst ever downgrade from reputable rating agencies, such as Fitch and Moody’s – we have been shut out of the international bond market since October last year and are set to remain shut out for the whole of 2022 unless the economic outlook improves significantly.
The resulting panic reaction – from the grim economic reality, the mixed and conflicting messages and outright untruths from government actors – has led to significant capital flight by businesses and international actors within our domestic bond market. And has complicated confidence in an already precarious banking sector that suffered the misfortune of the politically motivated collapse of some of our locally owned banks and financial institutions.
It is estimated that about US$200 million in capital flight occurred in January 2022 alone and the Central bank lost about US$687.6 million in net international reserves between November and December 2021.
This also accounts for the steep depreciation of the cedi since the beginning of this year. Based on this trend and the absence of a credible and innovative plan to stem its fall, some Financial Institutions and analysts have projected that the cedi would end 2022 at GHS 8 or above to the dollar. And almost GH¢ 10 or above to the pound sterling, with fuel prices likely to exceed the GH¢ 10 mark.
Another devastating consequence of the massive fall of the cedi is that it would cause a significant increase in our public debt even without further borrowing. This also means debt servicing will increase beyond the budgeted amount and worsen the rigidities that exist in the 2022 budget.
Moreover, inflation has risen from 8% in March 2021 to 15.7% in February 2022 and to 19.4% in March 2022 – the highest in 13 years, since 2009. There is a genuine concern that inflation could rise even further when the passthrough effect of fuel price increases among others starts to take hold.
This coupled with taxes are fast eroding the disposable incomes of households and has made life simply unbearable for the majority of Ghanaians. Compounding the economic hardships, is the ever-looming danger posed by the youth bulge – the unemployment crisis.
Data from the Ghana Statistical Service indicates that our nation is not only experiencing a rise in inflation, but also an all-time high unemployment rate of 13.4 %.
This means millions of young people are wasting away their most productive years in abject disillusionment as the Akufo-Addo and Bawumia government continues to pay lip service to the tragic unemployment menace.
Unemployment is leading to social deviance with a significant uptick in armed robbery, kidnapping, fraud, scamming and ritual murders.
Millions of Ghanaian youth with higher education, are trapped in the situation of a permanent purgatory with no clear indication that they can obtain gainful employment before they turn 60 years and retire from unemployment. Yet the President continues to fritter away the taxpayer’s precious money on luxurious chartered flights and other wasteful engagements.
The resort to ad hoc measures has failed to address the problem – once again, it bears saying that Ghana is at a crossroads – and this current administration has no credible solution at hand.
We proposed a number of initiatives that are still very much the solutions Ghana should implement to help tackle the problem of unemployment – the one million Edwuma Pa Jobs Creation Plan, and the free TVET combined with the National Apprenticeship Programme as contained in our 2020 manifesto.
I repeat that Government can draw on them for implementation because we can create an average of 250,000 jobs every year for the young people of Ghana as we make Ghana a 24-hour economy – three shifts of 8-hours each a day.
We must and the NDC will always support the private sector in various forms to enable them grow and expand their earnings and job openings. A stimulus package, like what we provided to pharmaceutical manufacturing companies in the past must be rolled out to other processing and manufacturing sectors.
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