In the past four months the average household in Ghana paid two-thirds more than it did the year before for fuel, food and flour. The Akufo-Addo (mis)led government blames the Russo-Ukraine war for Ghana’s economic hardships, and he mentioned same in his address to the United Nations in September of 2022. While true that Vladimir Putin’s intransigence has contributed to […]
In the past four months the average household in Ghana paid two-thirds more than it did the year before for fuel, food and flour. The Akufo-Addo (mis)led government blames the Russo-Ukraine war for Ghana’s economic hardships, and he mentioned same in his address to the United Nations in September of 2022. While true that Vladimir Putin’s intransigence has contributed to global food insecurity and allied perils, the real blame for the country’s challenges isn’t Russia but the United States. Or more specifically, its Federal Reserve Board. As soon as the Feds increased US interest rates in order to combat inflation, the move attracted investors from all over the world, and even Ghanaians who do not typically invest in US bonds exchanged their weaker Cedi for a stronger US dollar. They were fearful of what was to come and of further cedi depreciation and inadvertently also contributed to it. And since Ghana relies heavily on imports of food and oil to survive, borrowing in dollars to fund these imports hurt us a lot. More of the Ghana cedi was needed to buy the same quantity of goods. We imported inflation along with the dollar interest rates we pay on the loans we have been egregiously taking without recourse to the good doctor’s advice.
Good Dr. Common Sense.
When government kept fuel prices relatively stable during the Christmas holidays, it lost roughly $32 million in projected revenue for that period, and we can all trust that it will do whatever it can, now that the chicken parties are over, to recover as much revenue as possible. After all, the government owes all of some $28.4 billion to external creditors. At the time President Akufo-Addo returned from nodding his head to a rendition of the Oye song by a Chinese orchestra in Beijing, we owed $1.7 billion to China alone of the total debt. And we currently stand in default of our external debt obligations, hence the chasing of the so far elusive $3 billion IMF deal and a cry for debt cancellation.
How did we get here?
First the government borrowed like there was no tomorrow (which is a euphemism for thoughtless borrowing, knowing full well we lacked the capacity to pay back). Then the pandemic weakened us, but we need to understand what that means. The pandemic got everyone of our lenders so focussed on their own economies (and staying alive, of course) that they forgot about us. And make no mistake, 82 cents of every dollar our government spends is borrowed money. So, without the input of our foreign lender friends, and refusing to trim down an elephant-sized government and to deal ruthlessly with corruption, the pandemic was destined to eat us up to the bones. Let’s not get started at all with pandemic interventions. We know that was nothing more than a create, loot and share set of activities. Thirdly, the Russian-Ukraine War did aggravate our situation due to the rising food and energy costs, derailing our fragile and anaemic attempt at pandemic recovery with a 1% health recovery levy, which did nothing to offset the increase in external interest rates from 8% when we overborrowed in 2016 to 35% as we approach 2026.
The Fourth, and the most significant reason as I already mentioned is the rising strength of the US dollar. But there is a fifth reason, and it is the underlying one for all our economic problems: no government has been as corrupt in 3 decades as the current one, and I will explain it with a number.
That is how much remains unaccounted for in government accounting between 2016 and 2020. I don’t know why we are asking the IMF for $3 billion. We have 8 billion USD hiding in government people’s pockets. If we rounded everyone using a V8 and siren in this apampamu store franchise and did a search, we might find the $3 billion we say we need to turn our economy and country around.
Clearly the current economic hardships aren’t really our fault as a country, to be honest. That’s a fact of globalisation, and we are in the company of Sri Lanka, Russia itself, Zambia, Ethiopia, Burkina Faso, Mozambique and El Savador.
Oh, and Suriname too. Never forget Suriname.
It is also an undeniable fact that the government’s stupidity led us down this slippery slope of poverty. Government lacks the self-imposable controls needed to steer our economic ship, such as cutting down on government size, reducing the free SHS programme to a merit-based alternative, and eradicating corruption. Instead, it imposed the laughable I-don’t-care-what-percentage-it-was reduction in the salaries of ministers and appointees, tolerated Adwoa Sarfo’s shenanigans, and imposed an electronic levy that has all of us neutral and spectating citizens pissed off and uncooperative, especially in a lacking-in-consensus domestic debt exchange programme that has forced government to announce a third extension of a deadline for bondholders to agree to swap government bonds for bonds of lower value. And the incompetent government hasn’t even offered decent incentives, other than the threat from a political functionary with no known government portfolio that the bonds might become worthless before long.
This country naaa we just for lef.