GHANA IS BROKE – SACRED AND SIMPLE

The blame game is so easy. When a manager’s incompetence and recklessness create problems for him, the easiest thing in the world is to either point fingers and find some poor unsuspecting employee to blame or land his frustrations on those who occupied the office before him. Unfortunately, this whole idea of blaming others instead of being accountable and responsible has become part of this administration’s culture. The President and his propagandists are expert blamers always trying to get out of a sticky situation. They’ll intentionally make their mistakes appear to be somebody else’s fault. But the crazy thing is, the President and his party folks that continue to point their fingers and make Mahama and his appointees to look bad in the eyes of the public, are also usually the first to take credit when policies of the last administration brings glory and gains. The Ghanaian economy is stuck like a stranded truck and that is the scary reality. Even as revenue has declined, government spending has skyrocketed.

Government spending has not been particularly efficient either, Ghana spends more on salaries and debt servicing debt than capital projects. Personal costs haven’t changed despite government promises. The issue is that government revenue has declined, meaning that even the little spending that is done seems reckless. Government has borrowed more and more as policy makers decided that they would borrow to service our debt. Government has borrowed more that it earned. As a result, our national debt has ballooned, nearly tripling between between 2017 and 2019 to Ghc 205.5 billion. The current debt figures mean that from July 2018 to July 2019 alone, the total debt stock went up to GHc45.8 billion.

Part of the reason is that this government has borrowed more from abroad in recent times. The cedis depreciation has bloated the value of these liabilities, and it is no surprise to see that our debt-GDP ration is crawling. This surge in debt has come as a result of government’s reckless policy implementation and populist policies including the appointment of over 100 ministers and thousands of staffers and aides, reckless implementation of the Free Secondary School policy and other flagship programs and government’s general reckless spending.

All these spending and borrowing are unsustainable if revenue does not increase. There are no signs to suggest that government has figured out how to solve our revenue problem, meaning that the government will either grow increasingly impotent as the pressure intensifies or will continue its reckless borrowing until Ghana enters a debt crisis. Revenue generation improved under the Mahama administration as a result of the IMF credibility arrangement.

President Akufo-Addo’s missteps stems first and foremost from a mistaken diagnosis of the problems his administration has caused, and there does not appear to be any political acceptance of the degree of severity. But our biggest economic problem and the issue that require real political acceptance from the Akufo- Addo government, is the country’s growing public debt, government’s reckless spending and reckless implementation of its flagship programs. Without an honest and frank government acceptance of the crisis caused, the government’s chances of escaping its self inflicted debt trap will remain vanishingly small. The best thing that the President and managers of the economy can do is to admit that they do not have the answers to the key questions of building a prosperous Ghana. The administration did a disservice to this country when it, more or less, began to dictate our monetary policy, which is supposed to be from an independent central bank.

Within three years government has added over Ghc 80 Billion to our debt stock and as stated earlier, from July 2018 to July 2019, the total debt went up Ghc 45 Billion and in just two months, went up by about Ghc 5 billion. Economists and financial experts have partly attributed it to the CEDI’s marginal depreciation, recent funds advanced towards the clean up of the banking and non banking sectors, government’s reckless spending and reckless implementation of the government’s flagship programs.

The scary truth is that, if this administration does not get its financial house in order Ghana will undoubtedly face some sort of fiscal crisis in the few years.