"Please help us! We have a very serious [economic] crisis. The situation at home in terms of managing the economy is very uncomfortable".
This was the appeal by Minister of Finance Yaw Osafo-Marfo to about 250 Ghanaian residents of the United States and African-Americans last Saturday night. According to the Akyem-Oda MP, who became the Finance Minister barely four months ago, Ghana's economy is in dire straits.
He said the Kufuor administration did not only inherit an ailing economy on January 7; it also inherited a country that had already qualified to join the league of Heavily Indebted Poor Countries (HIPC), painful as that fact may be to Ghanaians home and abroad. "I am not saying we are HIPC.
We were already HIPC", Osafo-Marfo noted, adding that HIPC is a statistical qualification that Ghana's economic performance had long made it eligible to join. In the words of J.
H Mensah, Minority Leader and Minister in charge of Government Business: "We are poor. We are.
If we were not poor, we will not be eligible even to apply to join the HIPC initiative in the first place. It is because we are poor and highly indebted that we are eligible to apply".
Osafo-Marfo and Mensah were addressing the stakeholders of the Ghanaian economy during a meeting at the Ghana Embassy here. Ghanaians abroad, most of whom live in the US and the UK, contribute about $300 million annually in remittances to Accra.
Osafo-Marfo, Mensah and the Governor of the Bank of Ghana (BoG), Dr. Kwabena Duffuor, are in the US national capital as leaders of a delegation to negotiate Ghana's HIPC programme with World Bank and International Monetary Fund (IMF) officials.
The two Bretton-Woods institutions themselves have come under criticism this week over HIPC. Members of American civil society groups have planned to seize the streets of the two institutions this weekend to protest against the HIPC initiative, and to push for a more comprehensive debt Since the announcement that Ghana is joining the HIPC initiative, sections of the Ghanaian community here have expressed open dissatisfaction with the decision.
For many, the word "Poor" being tagged on Ghana is a taboo. But according to Osafo-Marfo, going HIPC was inevitable.
"We are spending 45% of our national revenue to service interest on our domestic debt. We spend ?4.4 trillion or ?440 billion on servicing internal loans.
That is 11% of our GDP. Any country that spends this much on its debt is already HIPC.
We are already HIPC." He said Ghana's public finance and revenue generation systems are in chaos. The 2000 budget of the former ruling party, the National Democratic Congress, Osafo-Marfo noted, had projected a 13.8% inflation rate.
At the time the New Patriotic Party was sworn into office, inflation rate stood at 45%. Money supply was equally bad, and interest rate stood at 45% instead of the projected 20%.
"We have not been able to service our external debt, and the weight of our domestic debt was crushing". He said the magnitude of Ghana's debt, external and internal, is worrysome.
Revenue generation from the Internal Revenue Service, Customs Excise and Prevention Services (CEPS) and all the tax generated from the country are not enough to cover wages, salaries and expenses of government. He said the Kufuor administration weighed other options of reviving the economy, but after attempting to balance domestic expenditure against total revenue without success, it decided to formally seize the HIPC initiative.
This, he said, would give Ghana a reprive from settling its crushing debt, and thus provide funding for economic development. He appealed to Ghanaians abroad to brainstorm and arrive at a decision on how they can help to solve the budgetary needs of the country.
He also praised members of the Ghanaian team in the World Bank and IMF offices in Washington, who traveled to Accra at their own expense to help fashion out the country's budget for this year. J.
H. Mensah on his part said the significance of the decision Ghanaians made in electing the Kufuor administration last December lies in the desire to move the country forward.
That decision, he said, was to consolidate the political and economic independence of Ghana. And since Ghanaians by that choice chose not to continue the economic path of the past, hard and realistic choices must be made to move the country forward, he noted.
"We want to bring positive change to Ghana," Mensah stated, appealing to Ghanaians abroad to team up to set up businesses that would bail out the economy. "We need successful businessmen to power the economy." Asked how the economy performed so badly under the eyes of the Central Bank, the Governor of the BoG responded that economic success lies in proper fiscal and monetary controls.
When a government spends more than it generates, there is a problem, he said.