The Former Governor of the Bank of Ghana, who was also the Finance Minister, Dr. Kwabena Duffuor has called on Ghanaians to try electing a businessman as President for a change because Ghana’s economic problem is “leadership problem’’.
He was speaking on how to get Ghana out of the current economic hole and avoid debt default during an interview aired on Joy News’s Upfront on Wednesday. When asked, “what kind of President does Ghana need now?’’ Dr. Duffuor answered, ‘’we have had lawyers as Presidents. Kuffuor was a lawyer, Professor Mills was a lawyer, Akufo Addo is a lawyer, Mahama is a communications expert, why don’t we try a business man?’’
He debunked the assertion by government officials that Ghana’s current economic difficulties and alarmingly depreciating currency is due to the Covid-19 pandemic and the Russia-UKraine war. He blamed it on leadership mismanagement.
“Fifteen African countries have registered single digit inflation during this same period including Togo, Ivory Coast, Morocco, Kenya, Uganda and so on. These countries didn’t jump over Covid-19 or Russia – Ukraine war. We are doing something wrong in Ghana’’.
He called on the government of Ghana to stop spending most of its revenue, borrowings and grants on consumption expenditure and rather invest more in capital expenditure in order to generate jobs and increase government revenue.
“Ghana has over borrowed and we have revenue shortfalls. But we are spending over 70% of our revenue, grants and borrowed funds on consumption but we must invest in infrastructural development for government revenue to grow through the increased job creation. Currently, very little goes into capital expenditure’’. He added, ‘’we borrow to fill our revenue gap, we pay interest on loans with borrowed funds and now the international market has shut us off from borrowing simply because we cannot manage our debt’’.
Dr. Kwabena Duffuor also attributed the pressure on the Ghana cedi to a lack of US dollars in the system as a result of excessive government borrowing as well as structural defects in our mineral and oil export arrangements to balance our import payments.
‘’Less than 20% of our total export earnings impact the Bank of Ghana’s cash flow, according to data from the Ministry of Finance itself. That is a big problem’’. He continued, ‘’take for example oil exports for 2021. Ghana exported 3.9b USD worth of oil but Ghana actually earned only 513m USD out of the total export while 3.4b USD went to the owners of the oil companies’’.
He added, ‘’at the same time Ghana spent 2.7b USD to import petroleum products for our own local consumption and this is where we have the structural difficulties with our balance of payment’’.
He argued that a new business approach is required to reverse the negative trend and suggested a participatory business model to replace the current concessionary business model which benefits foreign companies in the oil and minerals industry at the expense of the Ghanaian economy.
On arresting the Ghana cedi, reducing inflation and stabilizing the economy, the former BoG governor suggested some ideas to the central bank on leveraging on gold exports to ease the pressure.
‘’If BoG organizes all the gold exporters, buys off all their gold, even at premium prices, and also gathers the projected data from the gold exporters, there are two things the government can do with it to stabilize our currency’’, the former governor explained. ‘’Government can sell the gold forward with instruments to bring more dollars into the system. Secondly, government can use the projected data from the gold exporters for swap arrangements for more dollars to pay off some of our debts and to import goods and services. If done well, it will take pressure off the Ghana cedi. This can be done and this is my suggestion’’.
He said with the swap arrangement, we are not selling the gold but only swapping it for foreign currency in the meantime to take off the pressure on our local currency and the BOG can always have the gold back when they have enough dollars in the system.
He also insists that no government under the fourth republic has beaten the economic management record of President John Evans Atta Mills under whose Presidency he served as finance minister.
‘’Under President Evans Atta Mills, we managed our economy so well that we even achieved the ECOWAS convergence criteria and the IMF adopted our austere and efficient budget as their program. This was because we managed to reduce our budget deficit from 14.5% to 9.4% within a year. In three years we achieved the best economic results ever’’.
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