What’s the truth about Ghana’s economy?
Recent comments, by functionaries of the new government as well as other notable institutions, such as the World Bank, paint a rather poor picture about the state of Ghana’s economy that it is worse than hitherto thought.
The World Bank suggests that there is a looming economic crisis. The Bank cites background material by Oxford Analytica, a London based Political Economy Thinktank, which says macroeconomic indicators point to a serious challenge for the incoming administration.
Budget deficit is expected to hit 10 percent of GDP due to overspending, which has caused inflation to rise. The current account deficit is also expected to balloon to over 13 percent of GDP.
The incoming administration is admonished to quickly act in taking tough economic measures to stop the slide.
The World Bank assessment feeds directly into that of the new administration. Members of the transitional team have hinted about the unbelievably bad state of the economy. Other party members have also expressed grave concerns.
But, as expected, the former NPP administration, now in opposition, has hit back that those assessments could simply not be true; that the economy, if nothing at all, is several times better than what it inherited in 2001 and therefore the country’s situation could not be that desperate.
The truth about the real state of the economy is definitely important, but the greater concern is about the timing of such assessments.
It is a curious coincidence that immediately after the electoral victory of the NPP in 2001, the World Bank released damning facts about the NDC’s mismanagement of the economy – and the same could be happening now.
To be fair to the World Bank, it never said it didn’t know about the worsening state of the country’s economy. But the pattern of releasing such information immediately after a change in government has tripped a wire in several minds as regards the sincerity of the Bank.
The question doing the rounds now is: would the World Bank had released these materials and taken the same position had the NPP won the elections?
The Bank could be excused, though, since any such action on its part, while a party was still in power or succeeded in retaining power at the polls, could be interpreted as interfering in the country’s internal politics.
Not so the party that wins power!
In 2001, as is happening now, both the NPP and the NDC when in opposition campaigned vigorously on the deteriorating state of the economy. Both arguably won elections because the worsening personal economic situations may have driven a majority of Ghanaians to vote for change.
But much as the real state of the economy must be made clear, the stark pictures politicians create raises important questions.
Are our politicians so inept at acquiring information about the economy when they are in opposition that what they get to know is always so different from what really is?
Or is it that our politicians lack Ithe confidence in their ability to manage the economy any better, so they would want to use deception to lower the expectations of the masses? Whatever the answer, such behaviour does not inspire much confidence in our politicians with regard to their ability to correctly assess the performance of the national economy at any given time and so be in the position to design appropriate measures in ensuring its health.
While such behaviour may buy a (little comfort space for any new administration, it could, as is being ( expressed in certain quarters now, be capitalised on by multilateral institutions that for whatever reason would want the country to be dependent on their support.
Development experts are; agreed that the country’s economy ( has begun to advance. Since the 990s, Ghana has sustained real GDP growth of above four percent and per capita growth of about two percent. These figures have elevated the country toward the medium growth performance among African countries over this period.
Indeed, economic growth has averaged over five percent since 2001 and reached six percent in 2005-06. This strong growth nearly halved the poverty rate in Ghana, reducing the number of the population that lived below the country’s poverty line from 52 percent in the 1990s to 28.6 percent in 2005-06. Improving the policy environment was a major contributor to Ghana’s strong growth.
The World Bank reports that all sectors of Ghana’s economy, especially rural areas, participated in growth and this shared growth was key to the rapid pace of poverty reduction.
Given the impressive gains achieved in growth performance and poverty reduction in recent times, it is worrying to hear of dire forecasts for the country’s economy. The deteriorating global economic environment, certainly, will have a telling impact on the local economy. But over the past decade and a half, the economy has experienced enough revamping to enable it proceed at a brisk enough pace.
Ghana seems to have reached the point in its economic development where optimism and self-confidence should characterise its visions about its future. The politicians who lead must seek to engender that mood amongst the people, rather than the petty politicking that continually keeps the people in a sense of despondency.
Let us certainly discuss why we have not made progress in certain areas of our economy, such as the manufacturing and agricultural sectors. But in those other areas of our economy where we have made some progress, let us acknowledge them.
Credit: Emmanuel Kwablah
So what will Ghana’s economy will be this year. ARE we going to face Budget surplus or Deficit.