'Mills' government is the best', says Pratt but Gabby chuckles

The Managing Editor of the Insight newspaper, Kwesi Pratt, has described the first 18 months of President Mills as the best Ghana has had in 20 years.

He made this known on Radio Gold’s Alhaji & Alhaji current affairs programme Saturday, when he cried out to the National Democratic Congress (NDC) to rally behind the President in reaction to internal opposition from former President Rawlings and his wife, Nana Agyeman Konadu Rawlings, who is tying her head scarf in readiness to challenge Mills at the 2012 presidential primary.

Mr. Pratt cited the stability on the macroeconomic front this year, including inflation at 9.4%, the cedi holding its own against the dollar, interest rates coming down and the 6.2% growth in agriculture last year as evidence of the success story under President Mills.

But, in a sharp rebuttal, the Executive Director of the Danquah Institute has described it as “remarkably interesting” that the same Mr. Pratt, who used to insist that macro-economic gains are only as important as their positive impact on the living conditions of the Ghanaian masses, is now all too willing to forego that critical “social welfare” criterion.

Mr. Asare “Gabby” Otchere-Darko said, “Every indication points to the fact that Ghanaians have gotten poorer since 2008. More businesses are closing down every day; SSNIT contributions have dropped. Our local banks’ portfolio of bad loans has more than doubled in the last 18 months. Revenue agencies are not hitting their target; shop sales are down; everything is sluggish and slowish.”

He urged, “we should be asking whether the stability is not a fixed kind – I mean artificial and not driven by the fundamentals of economic activity -- because there is no income to feed consumption, which therefore feeds production and imports.” According to the head of the policy think tank, “the NDC government has managed to make the figures look cosmetically good and sexy while the facts on the ground are that the suffering of the masses have worsened and people are rather looking skinny not sexy.”

He added, “for example, there are a number of outstanding payments, totaling some GHC 2.9 billion that were not made by government last year and this year. These have helped to create this false impression of stability. But it appears this artificial stability has been achieved at the expense of our children’s education, people’s health, killing jobs, collapsing businesses and impoverishing workers.”

Mr. Otchere-Darko, said, “Why hasn’t government implemented the Single Spine Salary Structure across board as promised? This year’s salary arrears alone to public sector workers stand currently at GHC 750 million. District Assembly Fund, too, is in arrears. GetFund, NHIS, SSNIT, road contractors, energy subsidies, are all in arrears.”

He posed a philosophical question: “Should a father’s parental performance be based on his decision to save money in the bank when his kids’ school fees are piling up and there is no food on the dinning table?”

On Mr. Pratt’s claim that President Mills compares favourably to the two previous heads of state under the Fourth Republic, Gabby described it as too “simplistic and bogus”.

He explained, “I think to compare President Mills’ first18 months to that of either President Rawlings’ or President Kufuor’s only makes sense when you use what they inherited as a baseline, which should give a contrarian view to that held by Mr. Pratt. The facts simply don’t support his assertion unless we are reducing it all to his personal opinion based on a set of facts peculiar to the vast majority of Ghanaians.”

Gabby stated, “President Kufuor came in at the time of the impact of external shocks in 1999-2000 and President Mills, in 2009 met a similar even if milder situation, looking at the relative balance of payment, debt/GDP ratio and overall strength and size of the economy.”

He continued to compare statistics. “in 2000, inflation was 40% and interest rate around 49% and the cedi had depreciated by 50% to the dollar. In 2008, at the height of the global financial crisis, record crude oil prices and food crisis, inflation ended the year around 18.3%, interest rate around 25% and the cedi had lost 20% to the dollar.”

Gabby added that it was as a result of the strong performance in the domestic agricultural front and the social interventions of the Kufuor administration that the effects of the global food crisis, which caused riots in several other countries, were not that severely felt in Ghana in 2008.

“The agriculture sector, which registered growth of 3.9% in 2000, had grown consistently to 5.1% in 2008. It is difficult to see how credit for the rice harvest of June 2009 could be given to the government that took office barely six months earlier!”, he chuckled.

Mr. Otchere-Darko advised Mr. Pratt to “get a copy of Dr. Bawumia’s book, which gives a very comprehensive comparative perspective on how the Ghanaian economy has fared, especially on the fiscal and monetary fronts since 1983 or earlier. We should all grab copies on Tuesday to educate ourselves on some of these matters.”

Gabby said if Mills is being hailed today for halving inflation in less than two years, then Kufuor did the same and Rawlings did the same in 1998, if not better.

“By 1997, when President Rawlings started his second term, inflation was 70%, he managed to more than half that by the end of 1998. Yet, what was the end result? By 2000 it had jumped back up but to 40%.”

He continued, “by 2002 it had been more than halved to 16% by president Kufuor. Between 1995-2001 the average inflation was 30%, between 2002 and 2008, it was 15%. If Mills has halved it within his first two years then he is only following a trend. But, how has this been achieved? That is the gravamen, Kwesi.”

Gabby added that under the NPP, Ghana adopted inflation targeting as a policy, which was criticised by people who felt it ignored the real needs of the economy.

“Perhaps, Mr. Pratt should give credit to the inflation targeting policy which led to a significant disinflation process between 2001 and 2007, seeing Ghana experiencing the lowest average inflation and low volatility since the 1970s.”

The head of DI said, “What happened in 2007 and 2008 could be described as short periods of inflation jumps, as happened in the first quarters of 2003 and 2005, all caused by huge increases in crude oil prices. The truth is that Ghana has been free of such shocks since the last quarter of 2008, with both gold and cocoa exports doing extremely well, registering record nominal high prices.”

He said further, “let us not forget that Ghana achieved single digit inflation target in April and May 2006 when inflation was reduced to 9.9% and 9.5%, respectively. It happened earlier in May 1999 when inflation went down to 9.4%.”

According to Gabby, “Unlike what we are seeing now, in the past, lower inflation has been backed by higher economic growth and, arguably, more money in people’s pockets.”

He proceeded to show why, “under President Rawlings, poverty was reduced from 51.7% in 1991-2 to 39% and under president Kufuor, going further down to 28.5% in 2005-6. These gains were further cushioned by social interventions like his, free maternity care and others. What are the relative facts in terms of the living conditions of the masses today?”