General News of 2014-05-06

Hope and wishes don’t turn economies around - Casely-Hayford

Financial analyst, Sydney Casely-Hayford says the wounds in Ghana’s economy are too deep to be healed in nine months or even five years.

He was responding to President John Mahama’s assurance that this year is a turn-around year for the country’s ailing economy.

Speaking at this year’s May Day celebrations at the Independence Square, the president said though things were tough, government’s measures to resuscitate the economy were having the desired effect.

But speaking on Joy FM’s Super Morning Show on Tuesday, Mr. Casely-Hayford said managers of the economy ought to be measured and realistic in their expectations.

“You cannot turn an economy around, in the situation that [Ghana’s] economy is, just by wishing or hoping that it will happen,” he stated.

According to him, in spite of the steps such as increases in VAT rates and removal of fuel subsidies taken by government to generate more revenue, “the pit is too deep.”

He said in 2013 alone, government’s quarterly revenue shortfall was in excess of one billion cedis.

This meant that government spent more than a billion cedis every quarter than it raised, he argued.

“You therefore at the end of 2013, have a deficit of [close to] nine billion cedis to fight…most of it is because you haven’t paid some suppliers and you haven’t been able to meet some obligations and commitments which you have made, so you are going to carry all that into the following year and you have to try and fix that. The 2014 budget itself planned that there will be a deficit so you are carrying forward a deficit from 2013 and you are planning a deficit in 2014,” he noted.

This seemingly bleak situation, he said, has been exacerbated by low gold and cocoa prices on the international market.

In the midst of these, promising to turn the economy around in 2014 is an unrealistic projection, Mr. Casely-Hayford asserted.

The only way to turn the economy around in nine months, he said, “is to forge the micro-economic indicators and make it look like it is working, but it is not working.”

He is convinced it will take a minimum of five years and the disciplined implementation of well-tailored policies to fix the defects in the economy.

But the economic managers must tame their desire to make unrealistic promises and complain about pessimism when citizens say that things are not going well, he insisted.