No single government has the solution to our intractable economic problems – Economist

President Nana Akufo-Addo weeks ago said his government is trying its best to halt the free fall of the cedi, which has depreciated against the dollar from GH¢4.9 to over GH¢5 in the last two months but Economist, Dr. Nii Moi Thompson has debunked his claim saying, no government or President in Ghana can provide solutions to the economic problems the country is facing.

According to him, for a developing country like Ghana to survive in such situation, it needs to set aside all political differences, hold a forum and look out for a coalition government that would harness great ideas to fight this economic issue.

“By now, it should be clear to any Ghanaian that no single government or president has all the solutions to Ghana’s seemingly intractable economic problems, and that if we can’t have coalition governments, the ideal form of governance for a developing country like Ghana that would harness the best ideas from all political parties for the national development. Then, the least we can do in times like this is to set aside that our narrow political differences and rally around common solutions to our common problems” he said.

The Former Director-General of the National Development Planning Commission further noted that the cedi has lost 13.15% of its value against the US Dollar in just three months.

He said, “Between the end of December 2018 and the end of February, 2019, the cedi lost a whopping 13.15% of its value against the US dollar, the largest year-to-date depreciation since 2014, when the cedi lost 12.81%. For the same two-month period in 2018, the depreciation was only 0.07%. The year-on-year depreciation (February 2019 vs. February 2018) was 20.38%, the highest rate since 2015, the peak of the economic recession, when it was 27.38%. For the same year-on-year in February 2018, the cedi actually appreciated by 1.36% against the dollar”.

“These are gathering clouds of an impending economic crisis and living in denial is no longer an option. We are in this together. We must face it together or sink together.”

Dr Thompson said, most of Ghana’s debt is centred on inflated loans and contracts and government in turn spend scarce resources to clear debts that did not contribute much to the growth of the economy.

“Take the much-ballyhooed debt/GDP ratio, for instance, which was reduced from 73.3% in December 2016 to 57.9% as of November 2018 and has received much mention in the government’s list of achievements. Japan’s debt/GDP ratio is 253%, which has average 137.4% per year since 1980. Does that mean that Ghana’s economy is stronger and better managed than Japan’s? Of course, not. Despite the high debt-GDP ratio, consumer inflation in Japan is only 0.20%, compared to 9.0% in Ghana, and the policy rate there is -0.10%, compared to 16.0% for Ghana. In 2017, Japan spent only 9.4% of its budget on interest payments, compared to 26.1% for Ghana. Most of Ghana’s debt is contaminated with corruption in the form of inflated loans and contracts, what economist call “odious debt”. Combined with a high-inflation environment based on a partial reading of the causes of inflation, we spend scarce resources to service debts that never really contributed much to the growth of the economy in the first place but instead enriched individuals. Indeed, nothing captures the high cost of corruption to the Ghanaian economy more that our debt stock,” he stated.