‘Revolution’ at Finance Ministry

Botchwey takes over economy

…Abandons Presidential ambition

Longest-serving Ghana’s Finance Minister, Prof. Kwesi Botchwey has now effectively taken over the management of the national economy for at least the remaining tenure of President John DramaniMahama, and possibly beyond if the President and his party the National Democratic Congress (NDC) win the 2016 elections.

President Mahama’s disclosure to the Reuters over the weekend that Prof Botchwey will be leading the impending discussion with the International Monetary Fund (IMF) scheduled to start on the 16th September this year effectively confirms that the Former Finance minister is staging a major come back in the affairs of the state and the economy since he walked out of the Finance Ministry some 20 years ago.

Whatever discussion that will take place on the 16 September this year, TheaL-hAJJ can reveal based on the nation’s past experiences with the Fund that the IMF will hand over a three year macro-economic stabilization program to the nation that would definitely go beyond the 2016 elections.

The discussions that will commence soon and to be led by the Former Finance minister will touch basically on all sectors of the Ghanaian economy. It is akin to a doctor trying to examine a terminally sick patient with the view to diagnosing the cause of the ailment before the right medication is applied.

The IMF staff who will be jetting into the country in the next few days for the discussion would intrusively ask any question one can imagine on the health of the national economy and will insist that the right and correct answers are offered by the Ghanaian authorities. These are basically staff of the fiscal unit of the Ministry of Finance and those in charge of monetary policy at the Bank of Ghana (BoG) with leadership and direction provided by the veteran Prof Botchwey and supported by the beleaguered BoG Governor, Dr. Henry Kofi Wampah.

The fiscal and the expenditure monitoring units of the Ministry of Finance would play key roles in ensuring that the intrusive questions of the IMF team are answered with alacrity. They would also ensure that the fiscal situation will always conform to the various targets that the IMF program will set. Most of the prescriptions that the Fund will offer in the discussions would centre on cutting of spending and raising more revenue to fight the fire of fiscal deficit that has been raging for the past two years. The two and possibly three consecutive years and of double digit fiscal deficit is the source of headache for the nation’s economic managers.

Other divisions within the Ministry of Finance such as the Aid and Debt management division would also answer some relevant questions relating to the issues of the national debt. Here also the Fund program will set a ceiling and ensure that the economic managers would work hard to stay within the ceiling provided by the Fund so as to keep the debt levels at sustainable basis.

Other agencies that would answer tough questions from the visiting IMF team include the BoG, the Controller and Accountant General Department, the COCOBOD, the Ghana National Petroleum Corporation (GNPC) and many others.

Prof Botchwey, who was Ghana’s Minister of Finance from 1982 to 1995 and who was reported interested in staking a claim to the NDC flag bearership is supposed to work with the Fund to restore macroeconomic discipline within the three-year lifespan of the program.

With impeccable record as an Advisor to the World Bank on the 1997 World Development Report, the former Finance Minister was handed over the Chairmanship of the National Development Planning Commission (NDPC) after the demise of Mr. P.V.Obeng who until his death was the NDPC chairman. This, a Flagstaff House source has confirmed to The aL-hAJJ, has effectively ended Prof Botchwey’s presidential ambition.

With this position in addition, Prof. Botchwey is seen to have won the fratricidal turf war within the Mahama economic management team that includes the vice-President, Mr. PaaKwesiAmissah Arthur; former economic advisor to the President, Dr. Nii Moi Thompson; the finance minister, Mr. Seth Terkper and the Governor of the Bank of Ghana, Dr Henry Kofi Wampah.

Apart from this new responsibility of leading the negotiation with the IMF, Prof Botchwey has also been the Board Chairman of Ghana Gas Company, a company overseeing the first commercial production of gas in Ghana. This appointment was offered to him by the late President Mills after his sojourn in the United States.

Right from the beginning of the current economic crisis early this year, Prof. Botchwey, together with the President’s economic adviser, Dr. Nii Moi Thomson, were said to have advocated for an IMF-supported program to save the local currency from its anticipated depreciation and maintain macro-stability. However, the Finance Minister Mr. Seth Terkper was said to have rejected that move arguing that the so-called homegrown economic policies would be able to restore stability and sustainable economic growth.

However, after almost eight months of unprecedented exchange rate depreciation, the President personally intervened to change the direction towards an IMF program arguing that the Fund would bring credibility to the raft of economic policies being pursued by the government to revive the economy.

The discussions that will commence will lead to the approval of the program by the IMF Board.

With this program, the IMF is likely to provide the nation with some balance of payment (BOP) support to help increase our reserves and cushion the Cedi from further depreciation.

Other agencies within the Bretton Woods system such as the World Bank would also provide some budget support to the country to help ease pressure on the fiscal side.

The support of these two agencies will be augmented by the inflows of investment resources from the private sector and other institutional investors across the world that would likely restore confidence to the national economy leading to stability and growth in the coming years.

However, the Ghanaian government would have to meet certain key indicative targets which would come with timeline from the IMF before disbursement of any amount from both the Fund and the Bank would be made. Besides, whatever financial support that would come along with this program would be disbursed in the three-year lifespan of the program and would be tied to macro-economic performance and the so-called conditionalities that would be agreed before the approval of the program by the Board of the IMF.

The Fund will compel the nation to set targets on inflation, budget deficit, current account deficit, debt levels, interest rate, GDP growth, public sector wages and recruitment and other macro-indicators. These targets would always have to be met within the stipulated time given, before any financial support would be provided by the Fund. Often progress on these indicators is monitored every three months when the IMF mission visits the country to access the situation on the ground.

With this major comeback, Prof Kwesi Botchwey is augmenting the economic management team that is already being beefed up by President Mahama in response to the virtual collapse of the economy in just the first six months of the year.

Earlier, the President had appointed an adviser to the finance minister in his first announcement of a ministerial reshuffle in the heat of the economic crisis. Dr. John Kofi Baffoe was asked to advise the finance minister on how to navigate through the uncharted economic waters.

The announcement of Dr. Baffoe in a ministerial reshuffle by the President was in contravention of the established norm at the Ministry of Finance where the Minister was at liberty to select who becomes his adviser. Observers see the appointment of Dr Baffoe as an imposition on the Finance Minsiter Seth Terkper by the increasingly disturbed President who is yearning for a quick economic turnaround.

Then there was the reshuffle of the former Deputy Finance Minister, Mr. Rickette Hagan who was replaced by the hardworking Mrs. Mona Quartey. As a deputy minister, she is currently in charge of Economic Forecasting at the Ministry of Finance while the other hardworking but media-shy deputy finance minister Mr Ato Forson is in charge of budget.

Already the Planning aspect of the ministry has been ceded to the NPDC in early 2013 when Mr Seth Terkper was appointed as the minister. So the ministry since then is referred to as the MINISTRY OF FINANCE and not the MINISTRY OF FINANCE AND ECONOMIC PLANNING. Consequently, Mr Seth Terkper is also referred to as the FINANCE MINISTER and not FINANCE AND ECONOMIC PLANNING MINISTER.

These are the designations that are embossed in all the official correspondences of the ministry including the national budget.

With Prof. Botchwey now in charge of the NDPC and also about to lead the negotiations with the IMF for the next three years and with Dr. John Kofi Baffoe now taking up his job as Economic Advisor to the Finance minister, the proper role of Mr Terkper would require clarity. There is the need for more explanation from President Mahama, the nation’s number one citizen who has promised the long-suffering people of this country that things will get better next year and the subsequent years, the roles of the finance minister Seth Terkper