Selective Quotation Of IMF, Confused GDP Arithmetic

: MINORITY’S DIVERSIONARY TACTICS

After destroying the economy and putting the nation in an unsustainable fiscal path while in power, the NPP Minority Caucus, led by Hon Mensah Kyei Bonsu, the Minority Leader and former Minister of State at the Finance Ministry, Dr Akoto Osei seem to have taken solace in a diversionary tactic to cover for their poor performance.

In a meandering, disjointed and confused commentary (or press release), the group embarked upon a selective quotation of the almost 30-page document the nation sent to the International Monetary Fund (IMF) outlining its short to medium term macro-economic programme and target.

The Memorandum of Economic and Financial Policies (MEFP) of June 26, 2009, which covers the National Democratic Congress’ macro-economic program for 2009 -2012 was the subject of the manipulative commentary by the Minority in Parliament to throw dust in the people’s eyes and divert attention from the messed fiscal situation they have left behind.

The Minority Members of Parliament (MPs), who themselves are honourable men, in a brazen act of political chicanery of unparallel proportion, just dwelt on the introductory aspects of the MEFP and left behind the substantive issues which define the methods the NDC government is putting in place to clear the mess the NPP government has created while handling the nation’s treasury.

The Heritage wants to ask: why are they interested in just two pages of the document when the objective of the document is to make a case for financial support from the IMF and the World Bank to restore normalcy and health back to an economy battered and buffeted by mismanagement and misplaced priorities of the NPP government?

The NDC government would never have written the document in the fist place if the economy the NPP government had left behind was in good health. So, the issue of NDC using their so-called better economic records to scout for money from the Bretton Woods was just a smokescreen to confused issues and escape from record high deficits and arrears and commitments they have left behind.

The Poverty Reduction and Growth Facility (PRGF) that the NDC has gone for frowns upon the kind of indiscipline and lack of prudence that characterized the management of the economy under the NPP.

The Fund and the Bank would only rescue the economy if there is a guarantee that the nation would not go back to the mismanagement of the NPP era.

The guarantee the nation can give are the sound macro-economic targets captured by the MEFP, which is not a secret document and can be found and read by any one who can save some time and go to the IMF website.

According to the MEFP, “to restore and consolidate fiscal and debt sustainability, the government intends to reduce the fiscal deficit (excluding divestiture receipt) from 14.9 per cent of GDP in 2008 to 9.4 per cent in 2009, 6.0 per cent in 2010 and 4.5 percent in 2011.” The simple question to ask is: would the deficit reduction have been necessary now under the infant NDC government if the NPP government had spent within its means and achieved its deficit target in 2008 of 4 per cent?

The MEFP also states that, “monetary policy will support the government’s fiscal consolidation efforts over the medium term with a focus on stabilizing price and exchange rate expectations. Under the inflation targeting (IT) framework, monetary policy will aim at achieving a medium term inflation target of 7-9 per cent within a forward looking time horizon of 18-24.” Again, the question to ask is: would the inflation reduction be necessary if the NPP had achieved its stated target in 2008 of reducing inflation to 6-8?

The said document also asserts that, “the macro-economic goals for 2011 include…gross international reserves close to three months of import cover”. Finally, would these advice had been necessary if the NPP government had achieved its 2008 target of gross international reserves equivalent to at least three months of import cover?

The Heritage would like to advise the minority NPP to be fair to the people of Ghana because that is what they swore to do in their first day in office.

Again, the NPP minority in their political gambit, sought to confuse issues with regards to the calculation of the GDP figure. The fact of the matter is that the main budget read by the Finance Minister on the 5th of March this year quoted a provisional figure of GDP of 6.2 per cent, provided to it by the Ghana Statistical Service (GSS). With this growth rate, the fiscal agents of the Ministry of Finance and Economic Planning computed the fiscal deficit and came out with a figure of 14.9 per cent.

However, at the time of the preparation of the supplementary budget, the GSS again, came out with an updated GDP figure of 7.3 per cent, which was also factored in the deficit calculation. This reduces the deficit to 14.5 per cent. Now, with the arrears and commitment of 1.7 billion Ghana Cedis from the various Ministries, Departments and Agencies (MDAs) converted into deficit (9.7 per cent), the total deficit shoots up to 24.2 per cent.

The Heritage would like to appeal to the NPP minority to let the truth always prevail!