In my experience going to the hospital for medical attention, I have come to realise there are two kinds of patients: there are patients who know generally they are sick, they know which part of their body hurts and how they feel.
Beyond that, they don’t know what could have caused their ailment, and neither do they, therefore, have a clue as to what the doctor would eventually diagnose and what sort of medication would be prescribed. Then there are patients who have a fair idea of what is wrong with them, the possible causes and what range of medications the doctor is likely to prescribe for them.
They research into the efficacy and side-effects of each of the potential medications and are able to have a frank discussion with their doctor as to what medications eventually would be prescribed. I have had a unique relationship with one doctor at the 3M&C Clinic at East Legon in Accra whenever he attends to me, and he appreciates the fact that I always go prepared and with useful information about the range of drugs he could prescribe for my ailment, and I tell him which one I prefer and why.
Ghana has undergone several IMF programmes since independence. Nothing has fundamentally changed for the country in spite of those programmes. The country is still underdeveloped and import-dependent. Our last IMF programme was under the Mahama Administration, with the much-publicised objective to seek “policy credibility”. The then government got severely criticised by the then NPP that was in opposition. When the NPP assumed office after the 2016 elections, they were determined to exit the programme and subsequently vowed never to return to the IMF.
The 2015 IMF programme didn’t change the fundamentals of Ghana’s economy. The IMF does not exist to hold our hands, to transition Ghana into a developed country. I don’t know any country in the world that transitioned from a poor country into a developed country because the IMF gave them the technical and financial support they needed to make that transition.
So, when people ask the Akufo-Addo government to go to the IMF, exactly what do they want the government to go to the IMF for? The audience of Newsfile would recollect a recent programme in which Bright Simons outlined a range of IMF programmes that Ghana could access. Whichever one Ghana opts for, there would be tough and perhaps painful conditionalities that we must be prepared to endure, but the financial and economic benefits may not necessarily be as significant as people think. The 2015 IMF programme gave Ghana less than US$1 billion over the 3-year programme. That’s chicken change, compared to the current needs of the economy.
The main goal of this article is to ask these questions: does the Akufo-Addo government know exactly what is wrong with Ghana’s economy? Do they know what range of policies can fix the economy? Do they know exactly how an IMF programme can change the fundamentals of the economy? Would an IMF programme be a short-term fix or a long-term shift from an import-dependent economy to an industrialised economy with sustainable jobs that pay living wages?
In terms of conditionalities, we all know government spends over 70% of its revenue to pay public sector workers. Yet, the level of inefficiency and unproductivity of the public sector in Ghana is legendary. The usual IMF conditionality is either to cut the public sector wage bills by laying off workers or a freeze on new employment. It is not as if we don’t know the public sector does not deliver the efficient services required to develop the country. Do we have the willpower to swallow the bitter pill and take the bull by the horn?
If I were going to the IMF as a patient called ‘Ghana’s economy’, I would go with the following package (which I have previously published under the title, ‘Vision 24’), and ask the IMF to support me to implement it:
Manufacturing (Enhanced 1D1F and Industrialisation drive)
- Every natural resource in Ghana must have a factory or factories for processing
- All bankable 1D1F projects currently approved by the Ministry of Trade and Industry will receive equity funding, through the Development Bank Ghana, to take off. All future projects will undergo the same processes of approval to ensure all manufacturing projects are bankable.
- Government will provide 100% equity investment for all factories
- Government will initially own 90% shares in all factories, with Promoters getting 10% sweat equity
- Promoters will buy back Government’s 90% shares over 5 years, starting from Month 13
- Promoters cannot declare dividend until all government shares have been bought back
- All factories must operate minimum 2 shifts in a 24-hour cycle
- MDAs and MMDAs will operate 2 shifts, using current staffing levels, to ensure enhanced productivity
- Night economy to be supported by enhanced 24-hour security measures
- Abolish death penalty, with the exception of conviction for any form of armed robbery
- Commute all non-violent sentences to non-custodial community sentences (under the new Criminal and Other Offences (Procedure) (Amendment) Act), with prisoners engaged by MMDAs in commission-based environmental policing work.
Using domestic resources and domestic cedi-denominated contractors, Government will embark on massive construction of infrastructure to support the manufacturing base and other socio-economic activities.
- Suspension of debt serving for 24 months. Interest Payments for 2021 was projected at ¢35.8 billion (that was about $6 billion then). For two years, that would be $12 billion.
- Suspension of all corporate tax exemptions for 24 months.
- Quantitative Easing (printing of money) by the BoG to pay for all domestic inputs.
- Domestic resource mobilisation (taxation – direct and indirect)
- Foreign exchange control – Banks can only sell foreign currency for the import of products and services not locally available. Importers must find their own foreign currency to import goods that compete with locally-produced ones. If importers have their own foreign currency through exports, they are free to use their money to import whatever goods they trade-in. The measure could indirectly make imports more expensive, which effectively would make local products more competitive.
- Junk Bond Billionaires – Government will engage investors regarding the restructuring of debts under the programme to suspend debt servicing for 24 months. If any investors are unwilling to cooperate with government and decide to offload their bonds and other government debts, this may lead to a downgrade of Ghana’s sovereign debts to junk status. Government will under such circumstances mobilize Ghanaian, Nigerian and other African investors, to buy these junk bonds on the cheap, knowing full well that the value of those bonds will skyrocket after 24 months. We could well create Junk Bond Billionaires in Ghana and elsewhere in Africa as a result!
- Implement digital currency immediately, to fight against corruption and to broaden the tax net. This will ensure that government will have all the needed resources within the 24-month period to undertake Manufacturing and Construction as envisioned above.
- Streamline the Executive, with only 16 Ministries and Government Machinery (The Presidency).
For me, a two-year IMF programme with the above package can change Ghana’s economy. Either way, let’s not simply ask government to go to the IMF. Let’s discuss exactly what we need from the IMF and how we expect whatever programme we undergo to change the fortunes of the country.
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