The Government of Ghana, whether from the New Patriotic Party (NPP) or the National Democratic Congress (NDC), should learn to take responsibility for the challenges in the economy and not blame them on others, the Director of Research at the Institute of Economic Affairs (IEA), Dr John Kwakye, has stated.
Dr Kwakye says this is what governments in matured economies, such as United States, United Kingdom, France and Germany, do.
Dr Kwakye said these while commenting on the strong defense of the NPP economic record by Vice President Dr Mahamudu Bawumia.
He said this was expected because he was touted as the “economic Messiah” by President and chaired the Economic Management Team (EMT).
In his address at the University of Professional Studies, Accra (UPSA)on Wednesday February 7, Dr. Bawumia argued that the NPP managed the economy prudently and efficiently during 2017-19 and managed to turn it around from the precarious situation from which they inherited it in 2016.
Dr. Bawumia cited economic growth, inflation, fiscal deficit, debt, and depreciation, among others, as all pointing in the right direction during the period.
However, according to him, between 2020-22, the economy was hit by the Covid-19 pandemic and the Russia-Ukraine war and got derailed by these shocks, as they disrupted global supply chains and precipitated escalation in food and fuel prices.
Dr. Bawumia also cited the additional adverse effects of the huge financial bailout costs and legacy excess-capacity energy payments.
Assessing the address by Dr Bawumia, Dr Kwakye indicated that “Available data for key macroeconomic indicators for 2016-2023 show that many of the indicators trended positively during 2017-19. These must be attributed in part to the Government’s policies, including the introduction of the Fiscal Responsibility Act in 2018, which limited the fiscal deficit to 5% of GDP.
However, it has to be recognised that the favourable economic performance also occurred against the backdrop of some favourable factors, including higher oil output, especially in 2017; favourable world economic conditions, including stable oil prices and, generally, benign global inflation; and the extended IMF programme, which included some strict policy conditionalities.
For the 2020-22 period, while accepting the contribution of the exogenous factors mentioned by Dr. Bawumia to the poor economic outcomes, some of the domestic policy failings must also be recognised. These included: huge expenditure outlays on numerous flagship programmes and a bloated government; failure to increase revenue from traditional sources; and excessive and expensive borrowing from the international capital markets even as the public debt continued to rise to an unsustainable level. Failing to recognise these policy failings represented a missing link in Dr. Bawumia’s speech.”
He added that it is important that as government takes credit for the good economic performance during 2017-19, it must also be prepared to accept some responsibility for the poor performance during 2020-22.
“The apparent suggestion that Government did nothing wrong during 2020-22, could be interpreted as trying to sweep the policy failings under the carpet. Both the NPP and NDC must learn to not only take credit for good performance of the economy but also to take blame for poor performance, during their tenure.
“That is what governments in matured economies, such as US, UK, France and Germany, do. It is how you respond to the prevailing situations that you will be judged by.”
By Laud Nartey