Ghana's economy too dependent on donor support

Accra (The High Street Journal) - Panellists at a public forum in Accra have observed that Ghana’s economy is too dependent on foreign donor support. The forum, organised by Integrated Social Development Centre (ISODEC) and Save the Children Fund, discussed certain aspects of the NPP administration’s 2002 Budget Statement.

It was noted, for instance, that most of the sectorial projections of the estimates had over 70 per cent foreign support component. Some of the panellists said if pledges and expectations from donors turned out to be unfulfilled, Ghana’s budgetary provisions would be out of gear.

Kwesi Pratt, a journalist and one of the panellists, stunned the audience with leftist or socialist rhetoric’s quite different from the contributions of his colleague-panellists, made of Dr Akoto Osei, special advisor to the Minister of Finance, Moses Asaga, Minority spokesperson for Finance in Parliament and Dr Nii Noi Ashong, macroeconomist of the Centre for Policy Analysis (CEPA).

Kwesi Pratt described most of the submissions of the panellists as unworkable and said they represented the senseless prescriptions often offered by western agencies. He disagreed with reasons advanced for privatisation. He said some private companies in some Western countries had collapsed and asked wherein lies the much-touted efficiency of private companies. Kwesi Pratt’s contributions dwelt more on his distaste for capitalism and western concepts, which he described as neo-colonialist and exploitative.

Dr Akoto Osei, explained the rational (or the thrust) of the Budget Statement and said the emphasis would be stabilisation and growth. He emphasised that HIPC is meant to bring additional funds from donor sources, adding that it is a saving mechanism designed to re-allocate Ghana’s own funds which would have otherwise been used to pay our foreign debt. Funds accruing from HIPC would be channelled to the social sector to prosecute the poverty alleviation programme. He urged Ghanaians to disabuse their minds that HIPC would bring in additional funds.

Moses Asaga glorified the NDC record by quoting IMF figures, which suggested that from 1990-1999 poverty reduction had reached between 52 per cent and 58 per cent; life expectancy had increased while infant mortality had reduced. He said the World Bank/IMF support programmes of economic recovery in 1983 (ERP) and structural adjustment programmes (SAP) in 1985 enabled the country to achieve modest economic growth of 4.2 or 4.5 per cent.

On the 2002 Budget Statement, Asaga said the NPP policy on poverty reduction is laudable but “not evenly spread, especially in the three Northern regions and two other regions.” He submitted that some regions are comparatively well-off and urged that the deprived ones be adequately catered for.

He said the proposed 4.5 per cent GDP rate is low and would have expected a higher growth rate if the NPP wants to promote growth. He said the government’s proposals for 2002 lacked a mid-term programme and regretted its absence. On HIPC, Asaga said the government took a hasty decision without adequately appraising its pros and cons and suspected that Britain might have pushed Ghana into accepting HIPC with a ?65 million carrot promise.

Dr Ashong discounted claims that HIPC is to take a 20-year period, adding that assertion is erroneous. The relief package may vary from creditor to creditor. Some may take four, five, eight years, depending on the negotiation terms. He said when the NPP government took over in January 2001, “it found the situation in a mess”, there was no proper collaboration among the Ministry of Finance, Bank of Ghana and the Accountant-General’s Department. Reconciliation of figures became tedious.

It took time for the true picture to emerge. This scenario coupled with the financial audits conducted in some ministries, departments and agencies (MDA’s) accounted for the delay in making disbursements, especially to contractors and district assemblies.

He urged the government to pursue policies that would promote growth and widen the tax net but explained that agriculture is non-taxable. He said 80 per cent of the HIPC resources are meant or poverty reduction while the 20 per cent will be used for other purposes (including payment of domestic debt).

During discussions, there was disagreement as to whether cocoa farmers are adequately rewarded by way of world cocoa prices. A contributor wondered why non-cocoa farmers are not well catered for in the price incentive package, adding that if the President’s Special Initiative (PSI) is to have real meaning to promote textiles, cotton farmers as well as others should also receive maximum attention.

The function was chaired by Goozie Tanoh of the National Reform Party (NRP), with Charles Abugre of ISODEC being one of the main coordinators.