The former Finance Minister, Seth Tekper has called on the government to guard the current middle-income status of the country by implementing targeted programmes to maintain this feat.
This he said, in reaction to a statement made by the World Bank Country Director, Mr. Pierre Frank Laporte during an interview that a review of the economy in about six months’ time may likely downgrade the economy to a developing country status, if the country’s debt situation is not managed aright.
Speaking in an interview yesterday, Mr. Seth Tekper said that as it stands now, the primary requirement used to classify to have reached a middle-income status is the GDP percapita, and according to the World Bank, this ranges from US$1,026 and US$12,475. Hence, no room should be given to the use of secondary factors like the debt situation to downgrade Ghana to a developing-economy status, he stressed.
“Ghana is a middle-income country and we must not accept anything less than that. Let us work toward our middle-income status. So we should not accept the ambivalence that in some six months’ time the economy will be reviewed to assess whether we are still a middle-income country or not.”
“We should implement programmes to keep that status. We should work toward our own austerity to keep the middle-income status. We should manage our debt well, borrow reasonably, finance recurrent expenditure from the budget and keep the status of a middle-income country. The primary index qualifies us to a middle-income status, so we shouldn’t allow the secondary indexes to take us back to a developing-country status. It is a wake-up call for us,” he added.
Meanwhile, he called on the World Bank and IMF to come up with a blueprint that government can follow through to know the steps to take in order to maintain a middle-income status instead of resorting to reverse our current status as a middle-income country- an action which he says will affect the country’s dealings with the International community, and that may not augur well for the economy eventually.
“The World Bank should rather give us a blueprint for becoming a middle-income country and find ways of helping us on how Ghana can consolidate its middle-income status. They should give us the techniques on how to run middle-income countries. Part of their role should rather be how to guide us to retain the status.”
Economy at high-risk debt distress levels
Contributing to the debate on whether or not the economy is at high-risk debt distress levels, the former Minister said that there is no doubt that the country has reached such levels.
He said that, this becomes obvious when one considers three budgetary items; compensation, interest payment and government offices’ expenditure which amounts exceed total tax revenue, thereby requiring borrowing to expend on them.
“… so, if you are borrowing to pay these items, what other signals do you need to show that the country is in debt distress?”
He further said that, the country should be able to finance these budgetary items from recurrent incomes, and that the only expenditure to borrow for, should be capital expenditure, and even with that, part of the financing should come from the government.
He urged multilateral institutions- IMF, World Bank to be true to their figures and call the situation as it is, rather than being diplomatic regarding sensitive issues like debt which has debilitating effects on the economy.
