An economic advisor to the President, Dr. Nii Moi Thompson has described the former Deputy Governor of the Bank of Ghana, Dr Mahamadu Bawumia’s lecture on the state of the economy as questionable.
He also dismissed Dr. Bawumia’s claims that Ghana is heading back to the unsustainable debt regime.
Dr. Bawumia in his lecture stated that ” Government should as a matter of policy and urgency, significantly cut down on borrowing for now. The government should anchor fiscal policy on a debt reduction target and immediately announce it. Fiscal policy currently has no effective anchor. The announced intention to borrow an additional $1billion from the capital market this year should be shelved because it would only be achieved at very high cost which would worsen the fiscal and current account situation and make Ghana’s debt unsustainable. With low net international reserves, a double digit fiscal deficit, double digit current account deficit, and double digit inflation, Ghana would have had to pay a double digit interest rate for any sovereign bond issue this year.”
But responding to his assertion, Dr. Thompson stated that Dr. Bawumia’s assertion that Ghana is likely to resort to funds from the International Monetary Fund(IMF) to solve its economic issues is subjective.
“We are definitely facing challenges, we have challenges with energy, infrastructure etc but the point is that we are taking measures to address those issues,” he further revealed.
The 2012 vice presidential candidate of the New Patriotic Party (NPP) on Tuesday gave a public lecture on “Restoring the value of the cedi” at the Central University College in Accra.
He proffered some solutions to curb the depreciation of the cedi and revive the ailing economy.
He urged government to exercise fiscal discipline, admit the economy is in crisis, not blame the economic crisis on the implementation of the Single Spine Salary Structure, check revenue leakages and excessive borrowing, expand the tax net, and effectively tackle corruption among others.
“The government has to admit that the economy is in crisis so that it can carry the country along and get public support for the tough remedial measures it may have to take. The denial must stop. The problem will not go away by refusing to acknowledge it. There must be policy credibility to assure markets and investors that Ghana is a safe bet. In this regard, the government should resist the temptation to make new promises and commitments of expenditure for new programs when it is unable to even meet statutory expenditures. Such promises only serve to signal a lack of appreciation of the current situation and reinforce the loss of confidence in the economy, ”Dr Bawumia said.
But speaking on the Citi Breakfast Show on Wednesday, Dr. Thompson clarified that Dr. Bawumia’s solutions are already being implemented by government.
“Some of the issues he raised are quite familiar, they are not new, they have been around, long before the government came into office,” he said.
Responding to Dr. Bawumia’s assertion that the BoG’s measures in checking the depreciation of the cedi will not work, the President’s economic advisor downplayed his claims saying, “the Bank of Ghana indicated clearly that the measures they introduced were only medium term measures to save the depreciation of the cedi.”
He further explained that the “Bank of Ghana is an independent institution that is separate from the government and it carries out its own independent actions.”
Dr. Bawumia in his lecture also indicated that the Single Spine Salary Structure is not the cause of the depreciation of the Cedi or the economic difficulties the country is currently facing.
In a rebuttal, Dr. Nii Moi Thompson dismissed the issues raised adding that Dr. Bawumia only focused on one aspect of the policy.
“There are two main components of the Single Spine Salary Structure but unfortunately he focused on only one aspect of it- the wage bill component, and therefore his conclusion is questionable,” he explained.
By: Marian Efe Ansah/citifmonline.com/Ghana