Professor Godfred Bopkin, an Economics professor at the University of Ghana, has expressed that the nation is currently facing a more challenging economic crisis than ever before.
In his view, addressing this situation demands honesty and transparency from the government to unite all Ghanaians in resolving the country’s economic challenges.
He further clarified that the conventional fiscal adjustments would no longer be sufficient for Ghana to achieve debt sustainability.
“That is why in the latest IMF-supported program, the consideration is that after adjusting for fiscal consolidation, fiscal adjustment we could not restore debt sustainability. What that tells you is that now we have moved to another layer.
“Remember fiscal consolidation imposes a cost in terms of higher revenue because the household and private sector are paying for it. We can also have expenditure restrain rationalization; the government is the biggest consumer in the economy and if the government is cutting on its expenditure except when it is wasteful expenditure and that is not the kind of expenditure we are seeing here, that again weighs on households and the private sector as they interact with the public sector”Professor Godfred Bokpin
He thus emphasized that Ghana is in a real difficult situation that requires honesty, truthfulness that rallies every Ghanaian together so we can come out of this inclusively.
Additionally, he encouraged Ghanaians to engage in a reflective and serious assessment of Ghana’s current state. Furthermore, he elucidated the historical background of Ghana’s economic challenges.
“Since 1992, when we create distortions in the economy, some of them fueled by-elections, commodity shocks, or a combination of internal and external shocks, we used two years of fiscal consolidation measures to recover. It got to a point we were using three years, then we got to four years. So within the election cycle, we were unable to recover from those shocks through fiscal consolidation largely then another election will come.”Professor Godfred Bokpin
Moreover, he indicated that with COVID and the Russian-Ukraine and all of that, Ghana is at a stage where as a country its traditional method of correcting economic distortions which has been fiscal consolidation is no longer enough.
“So now fiscal adjustment is not enough. We are doing debt treatment. In the time past, we had done debt treatment solo with the external debts alone to complement fiscal adjustment. That is not enough anymore. Now we are doing domestic debt exchange. Remember that is also imposing cost, disruptions, impairing the balance sheets of households and private sector.”Professor Godfred Bokpin
According to him, all of these things together are ultimately going to affect the ability of economic drivers to respond to the government’s economic policy prescriptions.
“And that is where we find ourselves, unfortunately”, he emphasized.
Government Honesty On Domestic Policy Weaknesses
He again added that Ghana has aided the situation by local policy weakness, which has significantly exacerbated the economic disruptions. Hence, according to him, it will take a little while before the country bottoms out.
Professor Bokpin therefore encouraged the government to come clean.
“That is why a bit of honesty is needed here and it worries me. We keep telling Ghanaians that we have turned the corner but the data doesn’t suggest so. You just can’t bottom out within the shortest possible time because correcting a distortion and economic disruptions can be costly and again it can take a little while.”Professor Godfred Bokpin
He also pleaded that Ghanaians be a little bit patient but to have that, he reiterated that the government needs to be honest, and truthful and also make sure that there is fair treatment when it comes to the adjustment cost.
In addition, the Professor stated that the Government “essentially didn’t do it’s part of the haircut.”
He concluded that the 2024 budget has been one of the uninspiring budgets he has seen from this government. According to him, the budget, probably, on a second breadth may be the president’s last budget. He thus expected him to throw-in everything like losing coaches do in the last few minutes of a football game.
“That is not what happened. It tells you that probably the government has given up”, he underscored.
Professor Bopkin noted that there was not much innovativeness in the budget.
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