Economic growth is mirage

(Weekend Agenda) -- Mr Moses Asaga, a former Deputy Finance Minister has dismissed the Kufuor government’s optimism that the country’s fragile economy is stabilised enough for a take off this year.

Asaga, also the Minority spokesman on Finance, in an interview with Public Agenda on Wednesday pointed out that under the present circumstance, Ghana will not see any “appreciable economic growth” in 2002. “Why, when the rest of the world is expecting a economic slide, should Ghana expect to grow?” he questioned.

He also shredded figures presented by the Yaw Osafo-Maafo, Finance Minister as economic gains made in the first year of the current administration.

Asaga’s prognosis comes in the wake of the government’ upbeat-low inflation, interest rates, borrowing rates, and a stabilisation of the Cedi-assessment of its performance in 2001 in several public fora across the country largely through the “People’s Assembly”.

According to government, inflation declined from the end-year 2000 figure of 40.5 percent to 25.6 percent at the end of November 2001. The figure has since come down a couple of notches.

The Cedi also depreciated by only 2.5 percent by the middle of 2001 as against 30.6 percent for the same period in 2000. By end of the government’s first year, interest rates had declined by about half. Against this backdrop, the government anticipates to consolidate the economy for it to take off this year to deliver on all its promises to the electorate.

In response, Asaga concedes that some gains have been made while pointing out that such achievements are not unprecedented. Indeed, between the financial year 1998-9, the NDC government, Asaga claims, made gains, reducing interest rate to as low as 19 percent and inflation rate to 9.8 percent.

“Although some appreciable tasks have been achieved, it simply doesn’t paint the complete economic picture”, further stating that the government has failed to measure up to many of its manifesto promises.

For Asaga, the economy can be divided into three sectors, the macro, real and social. Given the present global climate, for instance whereby external factors have dictated low crude oil prices, Asaga felt that “macroeconomics have been easy to control and manage.” In parallel, he is concerned by the fact that the government has failed to meet its Gross Domestic Product (GDP) target of four (4) percent.

In other areas, the government promised 100,000 extra jobs to be created, “but we haven’t seen them yet,” said Asaga searchingly.

On the question of the impact of the HIPC agreement, Asaga restated the minority’s line that the parabolas for success are “quite uncertain.” The Minority still asserts that the government “rushed in to the agreement far too soon”, which acted at the detriment to other donor partners such as the Japanese, who have stalled work on the Accra-Cape Coast road for instance.

Asaga’s major concern stemmed around when Ghanaians would see the benefit of the HIPC. For him, the government set out two dates for entry into the agreement, the Decision Point, planned for last December, expected six months after the decision date.

Already and well into January 2002 and with no definite Decision Point reached, it is unclear to the Minority when the physical benefits of the agreement will begin to manifest in the lives of ordinary Ghanaians. At the moment, with alternative sources of international investment being withdrawn, due to the agreement, and no formal agreement in place, a sector of the economy appears to have the conundrum of a financial vacuum.

Essentially, the Kufuor administration sought to stabilise the rather battered economy on assumption of office on January 7,2001.

“The bad state of the national economy on the assumption of power by the NPP Government needed nothing short of immediate, bold, imaginative and determined efforts to bring it back on track,” states a document dubbed “Positive Change: A good beginning”. The 80-page book details the achievements and challenges of the NPP Government from January to December 2001.

Looking into the future, Asaga suggested that the production industry needs both investment and improvement, a suggestion Prof. Kwadwo Asenso-Okyere, an economist and Director of University of Ghana’s Institute of Statistics, Social and Economic Research (ISSER) shares.