Bring down debts, inflation, interest rates if economy is not struggling Bawumia dares govt

Dr. Mahamudu Bawumia

Dr. Mahamudu Bawumia

The 2016 NPP Vice-Presidential candidate Dr. Mahamudu Bawumia says if the IMF programme with government was effective, it should have shown in decreasing levels of the debt, inflation, interest rates and creation of more jobs. None of these is happening.

Dr. Mahamudu Bawumia who was speaking on Joy FM’s Super Morning Show stated that all these indices of improvement which are not happening under the IMF programme prove that government’s economic policy agreed with the IMF has very serious flaws.

“There is a very big hole in that programme….I am humbly suggesting that that programme is flawed”, the 2016 NPP vice-presidential candidate expressed concern.

The purpose of the IMF programme which began in 2015 was to reduce government deficits and debt accumulation, a tactic described in economics as fiscal consolidation. And also, as the government itself says, to give policy credibility to its homegrown solutions.

“If you have fiscal consolidation where your debt is going up, interest rates are going up, growth is coming down, inflation is going up then there is a problem”

Interest rates are currently at 33%. It was at about 13% in 2008.

Government in 2012 was proud to achieve single-digit inflation for 31 months. Inflation in December 2012 was 8.8%.

It is now 19% mainly boosted by prices of fuel, food and utilities after the country raised tariffs for electricity and water in December to increase competition in the sector.

Debt to GDP ratio is hovering around 70%, a level deemed dangerous and unhealthy for the economy.

“They have allowed the debt to GDP ratio to keep increasing whiles they are thinking they are doing fiscal consolidation”, the banker-turned-politician expressed frustrations.

For Bawumia, these are signs that the IMF programme is “flawed”. According to him, the flaw is because the fiscal consolidation aim of the programme is “not anchored in the reduction of the debt to GDP ratio”.

It means all of government’s fiscal consolidation does not touch the most important part of the economy – reducing the borrowing spree which increases the debt.

“I really question the design. It is not a surprise to me that the economy is not working”,

“If someone has been borrowing and you want to help them but you say okay you can keep borrowing, that doesn’t make sense to me,” he said.

But Dr. Bawumia refused to blame the IMF for the failure of the policy because he said government got what it negotiated with the IMF.

“Government has been claiming credit for its home-grown policy,” he said.

Minority spokesperson on Finance, Dr. Akoto Osei chose to speak for the IMF and indicated the Fund is unhappy with the Ghana government.

“Let’s not create the impression that the IMF is happy,” he said.

The former deputy Finance minister said the IMF Deputy Managing Director has had cause to come to Ghana to express displeasure and worry about government’s pattern of borrowing largely for the purposes of consumption.

He said although Ghana’s economy was due for review in February, it was postponed to April. This should worry us, Dr. Akoto Osei said.

He suggested the postponement could be due to the IMF’s displeasure about government’s plans to borrow by raising another $1billion Eurobond.


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