Understanding mismanagement of an economy in context: No excuses for Ghana’s “broke” economy
By Professor John Gatsi
Economic management outcomes depend on many factors including leadership.
It is unfortunate to think that putting together highly educated citizens or members of the political party in government means expected outcomes are certain.
If that is the only factor in economic management, then throughout history the American, Russian, Japanese, Canadian, German, French economies for example would not have recorded recession ,depression, debt distress, financial distress and sectoral crises.
Touting is not equivalent to expected delivery. When the economy was showing deep signs of vulnerability in the areas of huge debt and exchange rate volatility , the response was aggravated touting by mentioning names of people in government.
Another sign before Covid -19 was that instead of deploying policies to support the efforts of the Bank of Ghana to manage the currency, the government usurped the constitutional mandate of the Bank of Ghana by establishing exchange rate management committee which could not deliver.
It is time for government to publicly accept the fact that in currency management, there are internal and external factors which should be addressed with different strategies.
Ghanaians are expressing disappointments in economic management outcomes in recent times. The government has joined the queue by saying the economy is broke without providing what makes the economy broke. The discussion has assumed some comparisons that should be corrected.
There are some who think that if you are dealing with a global pandemic, issues relating to mismanagement do not arise. Some described the energy crises and the problems under the NDC as mismanagement because it was not caused by Covid-19 and the deep micro and macro level distress of the economy under the NPP is not mismanagement and that it is just because of Covid-19. This perspective is incorrect. It is possible that funds provided to tackle the pandemic have been managed in a manner that is not reflective of what should have been the case. Borrowing excessively in the name of Covid -19 without the willingness to conduct Covid-19 expenditure audit to ensure transparency, disclosures and accountability is a colossal fiscal mistake that will continue to strengthen the believe by people that mismanagement contributed to the crisis Ghanaians are experiencing now. The principles of accountability and confidence are not waived in the management of the economy during a pandemic. We all know that the pandemic has increased global fiscal deficit, public debt , cost structure of businesses among others including Ghana but does not in any way means zero corruption , responsible expenditure and accounting for funds disbursed are no longer requirements in public financial management.
Economic management during the pandemic has generally been expected to be difficult but it also came with faster access to funds to manage the economy. This easy access to available funds from national and international sources such as the IMF and World Bank was not available to the economic mangers under NDC when crude oil prices went down to the floor including gold and cocoa prices. Under Covid-19 economic management , on average gold, cocoa and crude oil prices are performing well and apart from 2020 , revenue has been encouraging. In the face of these facts, inability to convince Ghanaians that the results we are seeing is the best , means mismanagement is part of the financial distress of the country.
Therefore , the argument that the financial distress is justified because it is the outcome of a global pandemic is not acceptable.
It is sad that we seem to be attacking the credibility of individuals who were part of the NDC government as though they are not permitted to talk about the hardships and erosion of confidence in pandemic economic management and leadership of the country. It is most annoying that people who are holding juicy positions in government, sometimes in institutions that benefited from prudent and value for money application of public debts by the past government, are the ones doing this. Government should be encouraged that in times of widespread hardships, freedom of speech and expression provide reliable data as to how the people rate the government and perhaps areas around which new policies should be developed to address the needs of the people. Insulting and using vulgar words against people is an abuse of the privilege to serve Ghana in government.
The economic management outcomes today are not merely pandemic outcomes but also a reflection of some level of mismanagement.
Now, key government officials believe the economy is broke. Citizens are asking questions as to why “the economy is broke”?. Some genuinely do not believe Ghana is broke because a broke person who is not minded to stop or drastically cut down on offensive expenditure is mismanaging his life. The unwillingness to demonstrate real commitment to prioritizing necessary expenditure mirrors mismanagement. When these issues are addressed, then citizens will agree with government and reduce the degree of mismanagement tag.
Insulting and threatening citizens who express their frustration about the hardships and erosion of incomes and economic opportunities is mismanagement of the privilege to serve.