I’m John Mahama But Not Gordon Brown

A Review of “Gordon Brown confronts his borrowing problem”, Posted by David Smith; and The Synopsis of a Former Ghanaian Finance Minister: “Ghana economy is in tatters”.

Asante Fordjour


In November 2002, Gordon Brown, attracted worst time and headlines, since becoming Chancellor of the Exchequer in May 1997. David Smith wrote: “After five years in which the iron chancellor had kept a vice-like grip on the public finances, the autumn of 2002 saw a big change…The public finances, were often in surplus and debt being repaid, even without such helpful windfalls as the £22.5 billion auction of third generation mobile phone licences. The chancellor and his Treasury team wore their prudence with pride. This was a different kind of Labour government, one that made room for extra spending in priority areas but only after sorting out the books first. Previous Labour administrations had spent first and picked up the pieces later. Under Brown, prudence produced a win-win situation. Reducing government debt, for one thing, cut debt interest payments, and the money could instead be channelled into health and education.” With this economic heights, Gordon, naturally, became a Prime Minister.

But by the time Brown had his exit poll on 11 May 2010; most Britons, thought the new Labour project that was trumpeted by his predecessor- Tony Blair, was basically flawed economically as it failed to recognise the supply performance issues that challenge the UK economy and the way that many of the central problems arose out of a ratio of public spending that was too high in relation to national income. Warwick Lightfoot (31 August 2010), wrote this about New Labour’s rhetoric and fiscal rules honed by Gordon Brown with the help of Ed Balls, as new Keynesian agenda: “Higher public expenditure and higher government borrowing dressed up in words such as prudence that pretended they were something else. The fiscal rules far from being an effective restraint on public spending and government borrowing accommodated any level of government spending and the creation of a significant budget deficit when the economy was operating at the peak of the economic cycle and overheating…”

Why, then, should I have desired to be Prime Minister Gordon Brown but not President John Dramani Mahama? Whereas Brown’s Government paid parents and guardians Welfare Benefits: Child Benefit, Child Tax and Working Tax Credits to families of low-income group, Housing Benefit, Disability Living Allowance to “qualifying people” with all forms of disabilities such as mental health, blindness, hearing impairment or with mobility problems, John Dramani Mahama, like many Ghanaian leaders before him, pays no Job Seekers Allowance (JSA) or Employment and Support Allowance (ESA) or Carer’s Allowance, to any of his citizens. Ghana, like in most African countries, is survival of the fitters.

It might therefore, not be surprising that the Gordon Brown-led New Labour, accumulated a huge increase in government spending which aggravated the British economy’s long-term structural supply-side challenge at a time when it was about to become more difficult to manage as compared to Communist China, Indian and other emerging economies which become more competitive. Lightfoot (searchingfinance.com) stated that “the spending, taxation and regulation of New Labour made the traded goods and services sectors and the manufacturing sector in particular less internationally competitive. As well as seriously aggravating these long-term structural supply performance problems Gordon Brown created the conditions for the acute fiscal crisis that is now overlaying these structural supply performance matters.” What is true of our country? In July this year, Former Finance & Economic Minister: Nana Yaw Osafo- Marfo said:

“The economy is in tatters, and things are getting worse. Government is no longer in denial. There is now consensus that the economy is in bad shape. This is why it is lamentable that the president is sounding from the rooftop that wherever he has gone to, he is being commended for managing the economy well…The consequence of the decline in both domestic and foreign inflows is that our deficit in the first quarter has escalated out of target (by 28 percent). What this suggests is that we are unlikely to achieve even the outrageously high deficit of 9 percent programmed into the 2013 budget statement…” Amid these ups-and-downs in both business and consumer confidence, the former Finance Minister in the John Agyekum Kufuor NPP-led government stated that this negative development is not new and that over the past four years and half, there has been unsatisfactory economic growth in spite of the fact that the nation has had so many opportunities, including oil revenues.

Osafo-Marfo submitted that in 2008, the Ghanaian economy grew in real terms by 8.4%, without the nation benefitting from crude oil exports. This is in sharp contrast to 2012, where it showed 7.9 percent, both oil and non-oil sub-sectors put together, alleging that “the oil proceeds are not being used to grow the economy.” And that the President John Evan Atta Mills-Mahama administration bequeathed with a total public debt of US$8billion, which translates to some GH¢9.5billion at the beginning of 2009, has jumped to a hooping GH¢38.5billion, within 4 years and a half, and that under the NDC, the Republic is adding GH¢6.4billion every year to its public debt. “A great chunk of this total debt, indeed, 55 percent, is from domestic borrowing”, Osafo-Marfo said, noting this trend means that government has been competing with, and squeezing out private enterprise from borrowing from the banks.

“This trend explains the reason interest rates on government bills (91-day, 182-day and 1-year fixed note) have risen from about 11 percent in December 2011 to about 23 percent in December 2012. This has caused lending rates to rise. Private enterprises cannot access capital to grow their business in order to employ the youth…Unless we change cause, the unemployed youth will continue to roam the streets without employment with all the attendant social vices,” he warns. Finance and Economic Minister- Mr Seth Terkper, rebutted these projections, stating that Ghana’s economy is not in tatters contrary to Osafo-Marfo’s synopsis and that the stabilisation levy introduced by the Kufuor administration is no different from what Mahama’s regime is doing: “This is not the first time we are using temporary measures to try and resolve positions… The Kufuor administration sought solace in the same tax instrument during the global food crisis and so why the opposition is hitting hard at the government…”

The Kufuor regime, signed up to the Highly Indebted Poor Countries Initiative in 2001. According to World Bank, HIPC Initiative launched by the World Bank and the IMF in 1996, and further expanded in late 1998 (Enhanced HIPC Initiative), is the first international response to provide comprehensive debt relief to the world’s poorest, most heavily indebted countries. Under the Initiative, the WB and IMF Boards first decide whether or not a country is eligible for debt relief (decision point document). In a second step, all creditors (multilateral, bilateral, and commercial) commit debt relief to be delivered at a “floating” completion point. In between those steps, the country tries to implement the policies determined at the decision point (which are triggers to reaching the completion point). Some 34 Sub-Saharan Africa countries qualified for HIPC and the underlying principle is that due debt being owed, are rather retained by these poor countries and earmarked for specific social interventions.

The former Chancellor of the Exchequer- Gordon Brown had been a known voice when it came to the question of Africa’s debt-traps: soft-lending for ostentatious projects that benefited the ruling class at the expense of the masses in the past: sophisticated armaments; whose bullets and service costs could have fed and maintained millions of the diseased, ailing and impoverished peoples; unending bunkers; trenches; bullet-proof cars and jackets;  not forgetting economically viable projects but sited in wrongful locations but for political or ideological considerations, are well documented as sources of Africa’s unending debt-shackles. It is said that no true leader or family, will bondage the future of his/her peoples with debt-burden or ramshackle soil. The Pol Pots, Saddam Husseins and on our sub-region, Sergeant Doe, of Liberia, did it. But the strategy remains the same- build, destroy and reconstruct at their cost.

The Economy

If Osafo-Marfo’s revelations [“Ghana’s Troubled Economy] have anything to do with the recent presidential confessions, then we respectfully entreat leadership to rethink. Osafo Maafo has told the world that in 2009, the ruling National Democratic Congress (NDC) government, overspent the approved budget by GH¢300 million; shot to GH¢800 million in 2010; increased to GH¢1.3 billion in 2011; and at the end of 2012 stood at a “stomach churning and mind-blowing GH¢4.8 billion.” “Within this shell of a figure, the respective overshooting by the respective MDAs is as follows: Ministry of Interior GH¢19 million; Ministry of Health GH¢27 million; Ministry of Education GH¢60 million; Ministry of Environment, Science & Technology GH¢60 million; Ministry of Energy GH¢70 million; GYEEDA GH¢200 million, Ministry of Roads and Highways GH¢270 million; Ministry of Youth and Sports GH¢350; Office of Government Machinery GH¢650 million, including GH¢15 million for guinea fowl business, and GH¢33 million for tree planting, all in the name of SADA,” he said.

This was said about Brown’s Labour: “So when, in his pre-budget report, the chancellor unveiled big increases in government borrowing – £20 billion for 2002-3 and £24.5 billion for 2003-4 – it was a highly significant event. For both years the new borrowing projections were about twice what the chancellor [Brown] had forecast the previous spring. The indignities were many. On the day after the pre-budget report the headlines read “Goodbye Prudence” and the commentators asked whether this Labour chancellor was going the way of his predecessors.” Thus “Brown’s early prudence, [it is said,] may have delayed the consequences of tax and spend (particularly spend) but they were now coming through with a vengeance. Gordon Brown was prepared for a poor reception but still winced at the blows. The Treasury, of course, denied any loss of control over the public finances. The world economy was emerging only slowly from recession and in every country the public finances were coming under pressure.” This is similar to Mahama’s economists and here, with particular reference to Fiifi Kwetey.

In respect to academic attacks on the economy, it is reported that Brown and his advisers also insisted that there was no question of the government failing to meet its fiscal rules – the “golden” rule of borrowing over the economic cycle only to fund investment, and the sustainable investment rule, of keeping government debt below 40% of gross domestic product. Borrowing in 2002-3 was £22.2 billion, and thus above the £20 billion forecast. In his April budget that year, the chancellor was forced to revise up his 2003-4 borrowing projection up to £27 billion, followed by a slight drop to £24 billion in 2004-5.

Business Voice (Oct. 2003), wrote: “as Brown prepares to step up to the plate to deliver his 2003 pre-budget report, he faces an unpalatable choice. He could stick to the borrowing projections he made in April, in which case nobody would believe him. Or he could revise them up again, and accept another batch of humiliating headlines…This year’s headlines, will not be quite as bad as last year’s. The chancellor’s problem is that the numbers are going against him. With figures in for nearly half of the 2003-4 fiscal year, tax revenues are running below the Treasury’s forecasts, while government spending is coming through much faster. Current spending by government is up 9 per cent, the Institute for Fiscal Studies says, against a projected 6.5 per cent. Capital spending is up by a massive 175 per cent, which could be great news for the infrastructure but does not help a chancellor watching his budget deficit grow wider by the day.”

The National Institute of Economic and Social Research said Brown had only a 50-50 chance of achieving his golden rule. “Since that rule has been presented as sacrosanct, the potential for further serious damage to the chancellor’s reputation is large. The borrowing problem has three sources: The economy, while avoiding recession has been growing below trend, and this has naturally pushed up borrowing. With optimism increasing, that factor should diminish in importance. Second, tax revenues have been weak, even in relation to the sub-trend growth. Corporate tax revenues, in particular, have been well below what the Treasury expected. The danger here is a repeat of the first half of the 1990s, when for several years economic recovery did not produce the revenue boost the then Conservative government was relying on. Third, public spending appears to be obeying the old rule that once let off the leash it becomes impossible to keep under control. It took time on this occasion for spending to get going…it looks unstoppable.” I don’t know the value of Ghana’s economy but I don’t want to be Brown.

Gordon Brown's Farewell Moments

Gordon Brown’s Farewell Moments

The Chancellor of the Exchequer; whose premiership, arose against the backdrop of struggling economy and poor international diplomacy on the part of his once charismatic predecessor- Tony Blair, resigned with the following speech: “I said I would do all that I could to ensure a strong, stable and principled government was formed, able to tackle Britain’s political and economic challenges effectively. “My constitutional duty is to make sure that a government can be formed following last Thursday’s general election… “Only those who have held the office of prime minister can understand the full weight of its responsibilities and its great capacity for good… “I have been privileged to learn much about the very best in human nature, and a fair amount too about its frailties, including my own. “In the face of many challenges in a very few short years- challenges up to and including the global financial meltdown – I have  always strived to serve, to do my best in the interests of Britain, its values and its people.” With this Brown bade farewell to his colleagues, staff and thanked his wife- Sarah and their two kids.

It is argued that one of the main differences between Gordon Brown and Tony Blair was Blair’s superiority in selling hope to an electorate. How would you differentiate John Dramani Mahama from his immediate-predecessors- Professor John Evans Atta-Mills and Flt-Lt. Jerry John Rawlings? Such comparison is yet to be made. But this is Kevin Toolis’ political assessment (The tragedy of Gordon Brown – the forgotten Macbeth of British politics: A withering portrayal by Left-wing writer who turned ex-PM’s failure into a stage play, The Daily Mail UK, 11 August 2013) of Tony Blair and Gordon Brown: “Election manifestos come and go but a true leader only ever sells one commodity- hope. And Brown failed badly at that basic task. Blair, however sleazy he has become, always sold hope better. In a real-life Game Of Thrones, the prize of power that Gordon Brown had plotted and schemed for all his life eluded him even after he finally seized the crown from his usurper Tony Blair. Like some ancient Greek heroes, Brown ruined the better part of himself by his fateful indecision, a wilful denial of reality, and by the warped and dysfunctional court of acolytes he had created around him…”

Not until recently, John Dramani Mahama-led NDC Government had reasoned that economically, it makes no sense in sitting sobering on the country’s mass untapped treasures without it being mortgaged to advance the personal development of its peoples who needed it today. The government accordingly; deemed it fit in going on borrowing spree, all in an attempt to better the lives of the ordinary Ghanaian. Today, Ghana’s estimated debt to Gross Domestic Product (GDP), as recently announced by President John Mahama, who spoke at the 4th Ghana Policy Fair, stands at about 49.3 per cent.  The international credit rating agency- Fitch, has degraded Ghana from a B+ to a B, on the basis of its handling of its wage bill. President Mahama reassures the Ghanaian, with regards to the debt burden. “We may be facing temporary challenges, but measures have been put in place to overcome these and the economy is responding positively,” he said.

With an oiled economy, what bedevils Mahama’s socio-political uncertainties? “Tony Blair committed the nation to the worst foreign policy disaster- the invasion of Iraq- since the Second World War. But every night Blair slept soundly in his Downing Street bed as suicide bombers wreaked slaughter on the streets of Baghdad. In contrast, Brown beat himself up over the smallest political disaster, such as the November 2007 loss of child benefit details for millions of people by a junior HMRC postal clerk. Unlike Blair, he failed to delegate and for much of his time in Downing Street… Something else from his Scottish upbringing was to have an even more profound effect – the teenage accident on the rugby pitch that blinded Brown in one eye and seriously impaired his sight in the other…”

John Dramani’s childhood was almost all roses. But unlike Brown’s ascension to the political throne described as more like a Macbeth than Henry IV, and even without the greatest economic crisis of our lifetime, John might not want to be remembered as Shakespeare’s Scottish warlord; who ruled alone, in fear; weakened and beset by his own frailties and ultimately, overcome by the forces he had himself unleashed. Dramani is a “born socialist” and seems to understand the strengths of organized labour. It is said that election manifestos come and go but a true leader only ever sells one commodity- hope. How then, could John Mahama’s trials be on education or giving hope to the frail street mental health patient?


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