It is revealing to hear that the size of Ghana's economy dropped by $2 billion. It is also revealing to hear that the last time this happened was in 2000, when the NDC was preparing to leave office, with Amisah Arthur at the Ministry of Finance and Kwabena Duffuor at the Bank of Ghana.
Today the two men has swapped offices, with one as Minister of Finance and the other as governor of the central bank and the situation is just like before. Interest rates are the highest they have been for nearly 8 years. Inflation the same. The World Bank estimates that the trend of the last decade which has seen the number of Ghanaians living below the poverty line of $1.25 a day fallen from 39% of the population to 27 percent last year is also in reverse. It estimates that more than half a million more Ghanaians will fall below the poverty line as a result of the tight fiscal policy of the new NDC government that promised us a better Ghana.
Their reasons as simple: when wages and salary are suppressed and lower than the rate of inflation people cannot spend and they get poorer. Imports have slumped not because Ghana has suddenly discovered import substitution. It is because money is harder to come by, consumers are not buying so retailers are not selling enough for importers to ship goods in.
The cedi is relatively stable because importers are not buying the dollar to bring in goods. The country has spent $2 billion less this year on imports than same time last year.
According to Bank of Ghana’s latest figures, on the domestic foreign exchange market, volume of activity represented by foreign exchange transactions (i.e. purchases plus sales) by banks and forex bureaux slowed down in the January-October 2009 period as compared to the same period in 2008. Total transactions amounted to $7.10 billion, which was 23.3 percent decline from the level of $9.25 billion in 2008. Whereas total purchases over the period showed a 17.0 percent decline, total sales registered shrinkage of 27.1 percent.
All that we are seeing are creative ways to squeeze more taxes from Ghanaians. It is our hope that the decision to get Ghanaians to pay the DVLC road tax twice a year is not a meandering way to get Ghanaians to double payment of road tax.
Already, the 2010 budget says charges and other user fees of public services are to go up. Import duties are to rise. Tax exemptions are being scrapped on many items and organisations. The petroleum levies that were modestly slashed are to be returned. While government is all busy taxing and taxing, businesses are suffering. The hotel, restaurant and construction businesses are among the most hit. Hotels are laying off workers. Construction workers, many of whom are said to have voted for change, are now without jobs.
Ghana’s economy, which has witnessed progressively higher growth rates in the last nine years has suddenly seen growth plummeted. It is very unconvincing to blame the global crisis, because as the Finance Minister himself admitted, the impact of the global financial crisis on Ghana has been "modest." In fact it was this same Minister who in March blamed the previous government for allowing foreign investors to come onto our stock market, thereby causing the cedi's slump as the called in their investment.
In times of crisis, the world likes gold and chocolate. This explains why in the last ten months alone gold has seen a 28% increase in prices and cocoa, 21% up. Though, with prices much higher this year than 2008, the cocoa sector has performed much less than last year. Exports of cocoa beans and products grew by 10.9 percent in year on year terms amounting to $ 1.3 billion for the nine months to September, compared with 26.5 percent growth in 2008.
Remittances were where it was feared the Ghanaian economy was going to suffer most. While it has increased this year, what is clear is the modesty of increment. While private money transfers through the banks in the first three quarters of 2009 amounted to $6.74 billion, which represents 3.8 percent increase over those for the corresponding months in 2008, the 2008 figure was 36 percent increase over the transfers through banks in January-September 2007.
Whichever way you look, the NDC government has missed its 2009 target except the very reason that it took the decision to let Ghanaians suffer this year – fiscal deficit tackling. The overall budgetary operations for the first ten months of the year resulted in a narrow cash deficit (excluding foreign financed capital expenditures) of GH¢ 926.8 million (4.3 percent of GDP) for the first ten months of the year compared with GH¢1.9 billion (11.7 percent of GDP) for the same period in 2008.
Government has spent far less this year than it did last year. Year-on-year expenditure has declined by 5.8 percent, compared with a growth of 42.6 percent for the same period in 2008.
What is clear is that the NDC is neither pro-poor nor pro-business. Ghanaians are losing their jobs. Even NDC foot soldiers are complaining.
The mills or wheel of the better Ghana that we were promised must grind faster than what is happening now. Nobody can be happy about this regardless of what party you support. At least we know from the NPP performance that even when you consistently increase salaries in real terms for five consecutive years, it is no guarantee that Ghanaians will keep you in office.
So for the mills of development to grind faster would be good for us all. Mills do something…
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