Ghana is in economic crisis – Bawumia

Two-time vice presidential candidate of the main opposition New Patriotic Party (NPP), Dr Mahamudu Bawumia says the Ghanaian economy is in a crisis.

At a lecture on the depreciating value of the local currency against major global currencies of international trade at the Central University College organised in Accra on Tuesday, the former Deputy Governor of the Bank of Ghana said: “Government must admit that the economy is in a crisis so that it can carry the country along and get public support for the tough remedial measures it may have to take.”

He said: “The denial must therefore stop,” adding that: “The problem will not go away by refusing to acknowledge it.”

In Dr Bawumia’s argument: “There must be policy credibility to assure markets and investors that Ghana is a safe bet. In this regard, Government should resist the temptation to make new promises and commitments of expenditure for new programmes when it is unable to even meet statutory payments.”

According to him, “such promises only serve to signal a lack of appreciation of the current situation and reinforce the loss of confidence in the economy.”

Beside his call for restoration of confidence in the economy, Dr Bawumia said there was the need for fiscal discipline if the economy was to be fixed.

The Economist said the Government must ensuring that: “…We cut our coat according to our size,” adding that: “Revenue enhancing and expenditure reducing measures such as ensuring value for money in the award of government contracts through a transparent competitive procurement process that minimises sole sourcing”, must be tackled.

“Government should also deal effectively with corruption in the management of public finance. Government should immediately undertake a biometric based payroll audit to eliminate ghost workers as well as implement a biometric base system for all public sector workers to deal with fraud in Government payroll,” Dr Bawumia suggested.

He also warned that the country gradually slumping into an abyss of unsustainable debt which could worsen the already aggravated situation since, according to him, unlike years past when the nation benefitted from the Highly Indebted Poor Countries (HIPC) initiative, such debt relief was no more available.

Dr Bawumia further debunked assertions that the depreciation of the Cedi could be put down to the redenomination of the cedi by the Kufuor administration in 2007.

By his calculations, Ghana’s Ghc9.5 billion debt stock as of 2008, inflated to Ghc49.9 billion, representing an increase of over 40 billion in five years. Further crunching down the numbers, Dr. Bawumia said the current debt stock represents 57.7 per cent of GDP, and predicted that: “Our debt stock will be 60 per cent to GDP ratio by the end of this year.”