Accra, Ghana, May 4, 2020//-The Caucus for Democratic Governance, Ghana (CDG—Gh) says Ghana’s economy is showing signs of collapse as the country could not raise money internally to provide personal protective equipment (PPE) and other health needs to contain the spread of the deadly coronavirus disease 2019 (COVID-19).
The government which claimed that the country’s economy is robust had to run to the International Monetary Fund (IMF) and World Bank for support after three weeks of the COVID-19 pandemic stress.
“It is likely some may, but for a so called robust and strong Ghana economy to run to IMF after three weeks of COVID-19, presupposes serious weaknesses in our economy”, Dr E.K.Hayford, Managing Director of CDG-GH, added.
At the time of this publication, confirmed COVID-19 cases in Ghana have moved to 2,169 from 2,o74, according to the Ghana Health Service (GHS). The total number of deaths caused by the deadly pandemic in the country stood at 18 while recoveries stood at 229.
Bloated figures
He continued: “We have always suspected that our economy is fragile in spite of polished macroeconomic figures. Each time the Finance Minister reads the budget or comes to Parliament with extra budget request, some of his bloated figures are critically examined by Members of Parliament”,
Indeed experts on economy have often criticized the macroeconomic figures because, frequent high food and market prices with constant cedi depreciation, do not tally with low inflation figures presented by the government”.
Deception and tricks might be a weapon, but the exchange rate in times of crises will always expose these tricks, according to him.
Again delivering his address on May Day, the President Nana Addo Dankwa Akufo-Addo announced that Ghana would be running to World Bank for assistance.
This is surprising because according to the President, Ghana has one of the best economies in Africa. Yet the country could not stand on its own without external support, Dr Hayford said.
He continued: “The economy is proudly described as robust and one of the fastest growing economies in Africa. Some of us are therefore worried at the speed with which our economy has run into crises. Barely three weeks ago, that is before the COVID-19, it was cleverly described as the best in Africa, with one of the highest growth rate of 6.4%.”
Dr Hayford asked: “How is Ghana`s early call for a life line possible ; when all our neighboring countries in Africa have as yet not come out with any request”.
Ballooning debt
One fact is clear; this government has borrowed heavily, the highest in the history of Ghana. “The result is we have a high national debt”.
Just last month, Moody’s, a leading global rating agency had predicted that Ghana’s debt could hit 70 percent of its Gross Domestic Product (GDP) this year.
“The country’s debt projections include an assumption that these contingent liabilities add an additional 2% of GDP annually, implying a further increase in the debt ratio to close to 70% of GDP in 2020 from 64% in 2019”, Moody’s stated in its recent release.
According to Bank of Ghana’s December summary of financial and economic data, Ghana ended 2019 with a total debt stock of GH¢218 billion, pushing the country’s Debt-to-GDP Ratio at 63 percent.
If the $3 billion Eurobond loan and others are added to the debt stock, it will further worsen the country debt sustainability position.
Ghana recently received $1 billion from the IMF under its RCF to enable it deal with the COVID-19 pandemic shocks.
The disbursement according to the IMF would help address the urgent fiscal and balance of payments needs that Ghana is facing, improve confidence, and catalyze support from other development partners.
The COVID-19 pandemic is already impacting Ghana severely. Growth is slowing down, financial conditions have tightened, and the exchange rate is under pressure.
This has resulted in large government and external financing needs. The authorities have timely and proactively responded to contain the spread of the COVID-19 pandemic in Ghana and support affected households and firms.
The IMF continues to monitor Ghana’s situation closely and stands ready to provide policy advice and further support as needed.
Sinful creative accounting
The former President, John Mahama has often cautioned the Finance Minister for engaging in creative accounting, indicating that a number of debts are put under the base line to escape accounting.
Dr Hayford also suspected that the government was engaging in the sinful act of creative accounting.
Experts contended that the national reserves of the country should be able to keep its citizens floating for about three months before any rescue attempt.
CDG-Gh expressed concern that while the President is on his knees begging for IMF and World Bank support, the same incorrigible government is encouraging the Electoral Commission (EC) in spite of breaches of social gathering and physical distancing law) to compile a new register, that would cost us about 400 million.
Looking at the precarious position the country is in, the CDG-Gh is asking Ghanaian to vote for change in the up elections.
African Eye Report
