Economist, Prof Godfred Bokpin, has revealed that the recovery of the economy of Ghana is coming at a great cost.

According to him, despite the finance minister, Ken Ofori-Atta’s claim that the country is showing signs of recovery, does not reflect in the true state of the country. As such, he indicated that there is the need for government to be utterly transparent with Ghanaians on the cost the recovery is coming at.

“This recovery we are talking about is coming at a great cost that we have not seen in recent times. We need to appreciate that and put the sacrifice and cost side by side the recovery we are talking about, so that we are able to have a balanced posture that conveys the message that we sympathize with the sacrifices and the sufferings of Ghanaians, and that this recovery is at a great cost. Therefore, we should look at it with a certain perspective.”
Prof Godfred Bokpin

Prof Bokipin stated that it is characteristic of the finance minister, especially within the last three years, and the government as a whole to be overly optimistic. However, he noted that this is uncharacteristic of the NPP Ghanaians used to know.

With this, he explained that eight months ago, when the minister of finance appeared in parliament, he was aggressively confident and that reflected in the projections in the 2023 budget.

“Look at the target they set for us and the narrative they gave – they were going to turn things around quite quickly. They said they were going to bring inflation down to 18.9%, GDP will grow by 2.8%… Eight months down the line, the same minister showed up in parliament, with the same narrative but this time round, revised all the micro targets. Now, end-year inflation is more than 30%. That is why I’m saying that we are overly confident, aggressively confident, but it doesn’t reflect reality. Therefore, if you see the margin, variations and variants, it tells you of a certain posture that does not mirror reality…”
Prof Godfred Bokpin

Citing the balance sheet of the Bank of Ghana as a case in point, Prof Bokpin stated that it is a “proxy of what this country has had to go through”. He explained that the equity position of the Central Bank is hugely negative, and this does not bode well for the country as BoG is the bank of last resort.

“If the government is hard-pressed, if universal banks, rural banks, community banks, credit unions are hard-pressed liquidity-wise, solvency-wise, they run to the Central Bank. Now, the Bank of last resort is in need of a bailout, probably from a government that is already in a bailout arrangement. You call this one performance? You’ve done this to our Central Bank, and you say we should clap for you?… This tells you that the recovery will be slow, and it will be painful…”
Prof Godfred Bokpin

Economy not in full gear

Touching on the comment made by the finance minister during his presentation of the mid-year budget review in which he stated that the economy has turned a corner, Prof Bokpin revealed that although there has been some relative stability, especially with the approval of the IMF supported programmes, and the inflow of the $600 million and some other consolidation measures, it’s still too early to say that the country is out of the woods. This, he explained, is because the economy is not in full gear.

“You only say you have turned a corner when the economy is in full gear and all the variables are pointing in the right direction. For now, the economy is not in full gear because we are not meeting all our commitments to all our stakeholders optimally. I’m saying this because we are suspending coupon payments on our external debt that presents some foreign currency for us. So, if that enables stability, you cannot say you have turned a corner, because your economy is not in full gear.”
Prof Godfred Bokpin

Justifying his stance, Prof Bokpin noted that government is not meeting entire payments to all arrears contracted with institutions such as the Independent Power Producers and school feeding. In light of this, he emphasized that government cannot say the numbers are turning out good because the economy is responding fully.

“No, your economy is not in full gear. So, if you have suspended certain key things, for which reason you are seeing some stability, you cannot conclude you have turned a corner. Of course, we can see some relative stability and all of that, but the whole architect of the economy is not in operation. So, you want to be very careful how you interpret that signal, and that is where the vision is.”
Prof Godfred Bokpin