Fiscal discipline not producing growth - Chief economist

Dr Joe Abbey, Executive Director of the Centre for Policy Analysis (CEPA), has disclosed that even though the extended credit facility of the International Monetary Fund (IMF) to Ghana was restoring fiscal discipline, poverty will not reduce in the country.

Speaking in an interview with BUSINESS GUIDE yesterday, he explained that “there’s a cost in terms of people crying out that they don’t have enough jobs or that their poverty levels may be worsening. Yes, we are being forced to live within our means. But we have not reached the point where we are seeing this in our pockets in terms of jobs and increased wellbeing.”

According to him, Ghanaians would not feel the economic turnaround until they got growth and jobs.

Just support for cedi

“This is foreign exchange that is coming to us. It doesn’t go to the budget. That is money that rather goes to the Bank of Ghana (BoG). And its main purpose is to increase the buffer we have within, or cedi exchange rate. It is to support the cedi. It is supposed to be called like the balance of payments.

“Not a penny of that goes to reduce our budget deficit and our debt and so on. So yes we are receiving that and because of that the international market may not be asking for a lot when they lend to Ghana. The deficit is another measure of the borrowing requirement of the government. This is just a means to check you to borrow less.”

Opposition concerns

Reacting to government’s joy at the release of the fourth tranche of $116.2 million, Dr Mark Assibey-Yeboah, Member of Parliament (MP) for New Juaben South, said the IMF should have disbursed the fourth tranche in June after the third review but waited for three months.

“That’s why it has become news now. Now, why did it delay? It delayed because the IMF did not believe in the numbers that government was giving out, i.e. the data on our macro-economy. So the government had to go and present the proper data. It means somebody was lying to the fund initially. Then they were concealing the actual debt owed by the state owned enterprises (SOEs) in the energy sector i.e. VRA, ECG, TOR and the rest. So the IMF asked them to come clean on those so that the fund will know the total debt.”

This is no news because the IMF would disburse the remaining tranches since Ghana has not come out of the programme.

No confidence in economy

“This tells you that if you don’t present proper data to the fund, there is a punishment. This does not show confidence in the economy. We went to the IMF because we wanted policy credibility.

“If the Minister of Finance thinks that disbursing the fourth tranche means there is confidence in the economy, then where are we going? And in any case, under any IMF programme, our economy is not going to grow. It just stabilizes the macro-economy so the deficit comes down, so the debt to GDP comes down, but in terms of growth, the country suffers. No country has experienced significant growth under an IMF programme.”

The IMF Executive Board met on Wednesday and approved Ghana’s economic performance under the third review.