What were you expecting from Mr. Kohler’s visit to Ghana and what did it achieve?
The IMF as an institution is mandated to assist countries to keep a stable macroeconomic environment. We now know that this is not enough, that there should also be growth – that is the only way to fight poverty. For the managers of the IMF to go out of their normal scope of work and assist Ghana in establishing an investor’s council, that is to help Ghana in attracting private capital, is very significant not only for the West African country, but for the mandate of the IMF.
You are going to Paris to open another round of negotiations with the Paris Club. Do you believe that the fact that Ghana is considered to have done almost everything by the Bretton Woods book will help bend the ears of Ghana’s creditors?
Osafo-Maafo - We are the first country to go HIPC. The HIPC. The HIPC debt negotiations follow the same format and therefore one would say they are predetermined, but we want to fight this. Debt relief means that you should improve your cash flow to enable you to spend more on social sectors, health and education. We’re going to use the cash flow of the country as a basis for negotiations.
Are you in a position to assure potential foreign investors that. Come the next general elections, the government will not lose its nerve?
In the year 2000, the economy was destroyed because of the overspending in the run-up to the elections. In 1996, we suffered the same thing and, in 1992, it was even worse. As a Finance Minister, I am determined to win that battle, to make sure that in the election year we keep within our budget.
Did you have enough time?
We must go beyond 5% GDP growth and indeed get close to two digits. We should do more next year, which is not an election year, in terms of expanding our economy, so we are not forced to do more than necessary in 2004.
Are there any additional fiscal or other mechanisms that you can use to make Ghana more attractive to foreign investors? We have been in power only for 15 months. The previous government was basically perceived as socialist. Its conversion to the free market economy was admired by all of us, me included, but it had that credibility gap. This government has a completely different history. We believe in direct foreign investment, that profitability is not a crime and that people should make money, pay the due taxes and enjoy the rest.
How can you change official attitudes in such a short period of time?
Osafo-Maafo - You hit the nail on the head, it is not easy. The public service dealt with the previous administration for 20 years, so their minds have been fixed on certain things. It is not easy to change them around immediately.
Another endemic problem to almost all African countries is the low level of domestic savings, usually considered the initial engine of economic growth. Do you see any mechanism on Ghana that can serve as a substitute?
Osafo-Maafo - Ghana’s savings rate is below that of ECWAS, it is a real problem. We have to broaden the base of our financial services; we have to stabilize the currency to enable people to have the confidence to save. The statistics, however, show that both savings and deposits have been moving upwards since last year. I see as a sign of confidence in the system.
What is the stage of the privatization process and what is the primary aim of this process?
What were you expecting from Mr. Kohler’s visit to Ghana and what did it achieve?
The IMF as an institution is mandated to assist countries to keep a stable macroeconomic environment. We now know that this is not enough, that there should also be growth – that is the only way to fight poverty. For the managers of the IMF to go out of their normal scope of work and assist Ghana in establishing an investor’s council, that is to help Ghana in attracting private capital, is very significant not only for the West African country, but for the mandate of the IMF.
You are going to Paris to open another round of negotiations with the Paris Club. Do you believe that the fact that Ghana is considered to have done almost everything by the Bretton Woods book will help bend the ears of Ghana’s creditors?
Osafo-Maafo - We are the first country to go HIPC. The HIPC. The HIPC debt negotiations follow the same format and therefore one would say they are predetermined, but we want to fight this. Debt relief means that you should improve your cash flow to enable you to spend more on social sectors, health and education. We’re going to use the cash flow of the country as a basis for negotiations.
Are you in a position to assure potential foreign investors that. Come the next general elections, the government will not lose its nerve?
In the year 2000, the economy was destroyed because of the overspending in the run-up to the elections. In 1996, we suffered the same thing and, in 1992, it was even worse. As a Finance Minister, I am determined to win that battle, to make sure that in the election year we keep within our budget.
Did you have enough time?
We must go beyond 5% GDP growth and indeed get close to two digits. We should do more next year, which is not an election year, in terms of expanding our economy, so we are not forced to do more than necessary in 2004.
Are there any additional fiscal or other mechanisms that you can use to make Ghana more attractive to foreign investors? We have been in power only for 15 months. The previous government was basically perceived as socialist. Its conversion to the free market economy was admired by all of us, me included, but it had that credibility gap. This government has a completely different history. We believe in direct foreign investment, that profitability is not a crime and that people should make money, pay the due taxes and enjoy the rest.
How can you change official attitudes in such a short period of time?
Osafo-Maafo - You hit the nail on the head, it is not easy. The public service dealt with the previous administration for 20 years, so their minds have been fixed on certain things. It is not easy to change them around immediately.
Another endemic problem to almost all African countries is the low level of domestic savings, usually considered the initial engine of economic growth. Do you see any mechanism on Ghana that can serve as a substitute?
Osafo-Maafo - Ghana’s savings rate is below that of ECWAS, it is a real problem. We have to broaden the base of our financial services; we have to stabilize the currency to enable people to have the confidence to save. The statistics, however, show that both savings and deposits have been moving upwards since last year. I see as a sign of confidence in the system.
What is the stage of the privatization process and what is the primary aim of this process?
The privatization, or as we call it here, divestiture, is going on. We have not done it as fast as was expected because, previously, in the view of the public, the process lacked transparency. In this year’s budget, my target is about $50million between now and December.
It looks as if new investment in Ghana is not very sensitive to market signals such as the drop in interest rates.
Osafo-Maafo - We still have a lot to do in the area of good governance. There should be transparency in our public finance management, corruption should be minimal.
Can you tackle red tape more effectively?
Osafo-Maafo – This is exactly what we are trying to do. We have to change the culture of all the governmental financial agencies. We are not trying to do everything at the same time because we have limited resources. We need to improve the infrastructure. We need to handle agriculture properly; this is where 40% of our GDP is created. We need to improve the social sector: health and education. If we are able to carry those priorities successfully, it will indeed improve the investment climate.
