Economy in crisis - Government confesses

Contrary to government’s denial of a weakening economy, Business Finder can confirm that the same government has admitted difficult economic times to the International Monetary Fund (IMF).

A letter to the Fund, dated September 16, 2016 and signed jointly by Finance Minister, Mr Seth Terkper and central bank Governor, Dr Abdul-Nashiru Issahaku referred to  slow economic growth and gross financing needs as having continued into 2016 from 2015.

“Economic conditions have been difficult, owing to slow economic growth and tight financing conditions. Weak commodity prices, a shortfall in cocoa production and unreliable electricity supply contributed to the 2015 economic slowdown,” the letter said.

It will be recalled that the third review of Ghana’s programme with the IMF and subsequent approval of the third tranche of the US$918 million Extended Credit Facility (ECF) were delayed following government’s failure to meet some critical targets contained in the programme.

The letter was therefore to assure the Fund that government’s fiscal consolidation remained on track and further to persuade the IMF Executive Board to complete the review and approve release of at about US$116.2 million to shore up the country’s reserves.

Mr Terkper and Dr Issahaku further gave assurance that efforts were underway to address the challenges that had occasioned the deviations in targets.

“We are taking corrective steps to address the slippages for end-2015 PCs on net domestic assets and the wage bill, which were missed by a small margin. We also stepped up structural reforms,” the letter assured.

Government has vehemently denied that Ghana’s economy is in crisis as it continues to tout its achievements as impeccable and makes a case for re-election in December this year.

While on his campaign tours, the President, Mr John Dramani Mahama has defended is government’s management of the Ghanaian economy, claiming that the nation’s economy had become resilient under his presidency.

He has urged Ghanaians to ignore what he described as “propaganda” by his critics that the economy is in crisis.

The President’s comments have been prompted by increasing concerns from economists as well as opposition political parties of his economic management record, especially Ghana’s increasing national debt which they have warned could sink the economy.

Economist, Dr Lord Mensah of the University of Ghana Business School at Legon criticised government’s posture, saying it was hypocritical.

“This is evidence of the fact that managers of the economy do not know where the economy is headed; the uncertainty about the economy is a major disincentive to the business community,” he pointed out.