Live Update: Prof Kwesi Botchwey speaks on Ghana's political economy

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Created on Tuesday, 03 June 2014 00:00

Prof Kwesi Botchwey speaks on Ghana's political economy

03 June 2014

Prof Kwesi Botchwey, Ghana's longest serving Finance Minister takes his turn at the Distinguished Speaker series organized by the Central University College.

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He is the third speaker in the series. Dr Mahamud Bawumia was the second speaker.

Under the theme “State of the Nation’s Political Economy and the Role of Civil Society” Prof Botchwey would attempt to dissect Ghana's economy through the lenses of politics.

In his tenure as Minister, Botchwey championed many IMF interventions and tried to put the country's economy on track.

Having left the country for a number of years, Prof Botchwey returned and played a crucial role in the just ended National Economic Forum which ended with what has now been christened the "Senchi Consensus."

After a long introduction by Prof Kwesi Yankah, the distinguished speaker mounts the podium to begin his lecture.

Prof Botchwey applauds his earlier speaker Dr Mahamud Bawumia, "whose credentials i respect. I offer no rebuttals [to his lecture]. I do agree with much of what he said."

He says Political economy has a chequered history. It is the interplay of politics and economics and shows the way political forces influence economic decisions.

Critical Issues facing the economy.

ANECDOTES

I see a nation reeling widespread disaffection; a bit of despair, a popular mood marked by frustration, arising cynicism about any explannation, assurances by government and technocrats.

A feeling that everybody in public office is engaged in corruption and money grabbing.

There is a spill over on the roads as citizens jump red lights and drive on multiple lanes and condemn law abiding motorists to long hours of stay in traffic.

The scathing curses of angry motorists as despatch riders come screaming to motorists to make way for some functionary to pass by.

It is also seen in the desperate faces of destitute who scratch cars or rain insults if one fails to offer help.

He says one one cannot appraise the nation's political economy on the basis of anecdotes. We must study and analyse the true state of things.

First there is the need to look at the unstable macro-economic issue in the country and the fiscal imbalances in the budget.

SENCHI CONSENSUS

Key observation at Senchi was to underscore policy credibility for the restoration of macro economic stability.

There has been erosion of the country's credibility in the eyes of the international market and even within the country.

We have missed macro-economic targets on two consecutive occasions not even by smaller margins.

The panic driven changes in measures announced by the Bank of Ghana have not worked because the very structure of government expenditure has imposed a certain rigidity on the national budget.

In last year's budget alone; wages and public debt accounted for about 82 per cent of government per cent.

It leaves a paltry 18 per cent for everything else. This challenge has not been understood or highlighted in public discourse.

The situation in 2014 could become worse because the projected revenue is 24 billion cedis; statutory spending and other expenditures accounts for 102 per cent of total revenue leaving a negative 200 million cedis for expenditure on infrastructure.

If the policies of full cost recovery will not be pursued then a provision would have to be made for the payment of arrears for the operations of the utility services.

If the evidence of history is anything to go by and the constraints on the economy, transfers from the budget for the payment of utilities will not work.

Energy pricing remains a key issue needing a quick resolution.

The country for many years has lived beyond its means and it is time to resolve that.

CHOICES IN BORROWING

Borrowing from international markets thus carry its own conditions and are not markedly different from the conditions from borrowing from IMF.

The country can decide that we will not go to IMF for funds; we can decide that instead of medium term drawing at lower cost from IMF, we will borrow from international markets at greater costs and short tenure and with pretty much the same conditions.

It does not matter which of the choices we make, when we do not have clearly spelt out policies which would convince our patners that we are able to pay for the loans we are taking then it would even be difficult for the creditors to give out the loans in the first place.

Economic management and governance

In the area of economic management there is need for the streamlining of decision making by the ministries, agencies as well as the complimentary role of the National Development Planning Commission. The presidency also has a role to play as an arbiter in the decision making process.

A great deal of confusion can be caused in the absence of such clarification and streamlining.

The talk of corruption has been loud. But to make the talk constructive and helpful, we need to avoid filing anecdotal self seeking evidence and avoid tainting just about everything with corruption.

When we talk about corruption it helps when we talk about whether there is inadequacy of legislation or the breach of the laws.

It is important however that when issues of corruption are raised, they must be dealt with as expeditiously as possible in order not for the perception of corruption to linger.

Our political lives have been polarised and lacking sometimes, civility.

We pretend that the conflicts that have set other countries back cannot happen, but the dangers of political lifestyle.

There is rising tensions among parties and even within parties.

The losing party start plotting on the morning after the defeat. The seeds of conflicts are sown slowly and accumulate.

We must take a deep breath and go for consensus building. Unless this is done, it will be difficult for the country to move on.

EMPOWERMENT OF CIVIL SOCIETY

Even though there has been a groundswell of activities by civil society groups, it is time for such groups to refocus just not on the wrongs of government but also on social mobilisation.

There is widespread complain of water, power, healthcare, politics is increasingly shrill and lacking in depth and principle. It appears we are engaged in a race to the bottom. Are we doomed? of course not.

We have been there before but was able to dig ourselves out of it. We can do it again now when the crisis is not quite as severe.

Our forebears did not christen Ghana as the Black star for nothing.

It is time to stop the moaning and move on with the national development.

Source: Myjoyonline