I come your way today on behalf of HE Nana Addo Danquah Akufo-Addo to render an unreserved apology to HE John Dramani Mahama, Former President, Republic of Ghana. This has become necessary at this point that Mahama’s “Demonic IMF” has come in handy; in fact, it has come at a time Nana Addo/Bawumia “robust economy” needed financial oxygen to survive a kick.
Before I proceed, I want to make this point forcefully, that, it is not entirely true that the IMF Poverty Reduction Growth Trust (PRGT) program President Nana Addo and his finance minister have decided to enter into does not come with ex post conditionality. What I can argue for them is that, Ghana has not entered into an extended program; that this Rapid Credit Facility comes with zero interest (concessionary in nature) and one-of-disbursement formular is applied (ie disbursements are not made periodically after an agreed period of assessments).
In this case, HE Nana Addo’s decision to run to the IMF with a cap-in-hand for a GHC 3.145bn to be drawn from the IMF’s Rapid Credit Facility which is designed under the Poverty Reduction and Growth Trust (PRGT) was approved for specific expenditure lines. So that, once the government cannot apply same funds to for instance pay workers of STC or use the GHC 3.145bn borrowed cash to build roads or extend water to my own town, Damongo, that implies there are conditions within which the funds would be applied.
Precisely, the funds are supposed to be utilized strictly to:
- Support Balance of Payment which is already worse before the outbreak of Covid-19 pandemic.
- Support fiscal management
- Support small scale businesses
- Stimulus packages to vulnerable families
- Specific expenditures on COVID-19 (health related)
Anything outside of these won’t and can’t be a legitimate expenditure within the brackets of the Rapid Credit Facility.
All in all, Nana Addo/Bawumia’s NPP government is back to the IMF to borrow GHC 3.145bn to be paid by the taxpayer in the future with or without interest. This was same IMF President Nana Addo and Dr Bawumia made look demonic in the eye of the Ghanaian when Mahama’s administration entered into an extended program with. What has changed?
Covid-19 pandemic has come to expose the worldly touted “robust economy”. At the same time, this pandemic has created the room for the already milked coffers of mother Ghana to be milked to death. Already, from 2017 budget year to 2020, funds have been redirected to the Presidency for the purposes of consumption related expenditure and not for major capital investment related expenditures. The over 1000 staffers draw down on these bloated allocations.
These funds were mostly taken from MMDAs as a result of the capping and realignment policy of Nana Addo and his Finance Minister. An agency like the NHIS which already has funding gaps has had to grapple with the capping policy so that, about GHC 900m is taking from the NHIS every year to the Central Government.
The about 126 ministers and 1000s of Presidential Staffers and special/private auditors all feed from the limited milk from the starved but molested cow (Ghana). That is why you would see a single appointee doing so well financially than a government agency like the NHIS which will be looking for money to pay its service providers for more than 2 quarters but cannot raise and won’t get because government won’t pay its subventions. Indeed, the hungry cow is being milked to death.
Although the Covid-19 strong winds have come to blow the anus of the “pregnant hen”, it has equally created the space for the government and its allies to siphon funds and redirect expenditure. With the rapid responses from world organizations like WHO, The World Bank, IMF and other giant economies, Ghana has the flexibility to creat a fiscal space by realigning proposed expenditure lines, reallocation of funds and spending from accumulated funds from the stabilization fund, proposing and getting all set to spend from the about $579.61m Heritage Fund.
When the first news came blowing, Mr Akufo-Addo addressed the nation for the first time with an announcement of seed money of GHC 100m to tackle the deadly virus. All came hailing the King and a lot was said about his preparedness as the amount supposed to be set aside was even more than the WHO threshold as set out. Swiftly to follow was the Finance Minister’s address to Parliament in which we were told a different story; after all the money was not there to be set aside but we were still going to look for (borrow, beg, take from future savings, etc).
The Finance Minister’s address revealed that GHANA WAS GOING BACK TO THE IMF and the World Bank to actually BORROW in order to keep our economy on ventilators. HE Nana Addo and Hon Ken Ofori Attah borrowed a whopping GHC 4.861bn from the IMF and the World Bank (GHC 1.716bn and GHC 3.145bn respectively).
Aside these GHC 4.861bn borrowed, the following are the proposed realigned/adjusted expenditures from government’s 2020 budget to all Ministries and agencies and other giveaways from other institutions:
- Capital Expenditure (CAPEX) and goods and services cut down by GHC 1.248bn in order to create room for spending on Covid-19.
- Reduction of the Net carried and participation interest of GNPC from 30% to 15% so that the remainder will be utilized for Covid-19 related expenditure.
- A proposed Amendment to the Petroleum Revenue Management Act 2011 (Act 815) to withdraw from the Heritage Fund which is estimated at about $591.1m as at the end of 2019.
- A capping on the stabilization fund to create space for government to spend up to about GHC 1.250bn in accordance with section 23(3) of the Petroleum Revenue Management Act (PRMA).
- A GHC 3bn stimulus package designed by the Commercial Banks under the auspices of the Association of Bankers for the purposes of revitalizing the Ghanaian industry especially the pharmaceutical industries.
- Beginning May 2020 to December 2020, Ghana as a member of the International Development Association will have about $500m from World Bank as debt relief to tailor into Covid-19 related expenditure.
Aside the above giveaways, the President set up a Covid-19 Fund with his yet-to-be-earned three months salary to bait and attract funds from individuals and institutions. So far the fund is doing well with donations from individuals, private institutions and even state institutions that can’t pay their bills, for instance the NHIS. Interestingly, rumors have it that the cash realized from these donations have been paid to political heads in various regions to manage instead of the Covid-19 technical team and the experts on the ground.
With all the above funds and reliefs within the control of the Finance Minister and President Nana Addo, Ghanaians can judge whether we have a feel of them by deeds or by words. With the accumulated funds:
-The GHC 280m allocated to the ministry of gender and social protection for just food to the vulnerable families during the lock down. What was the results from the GHC 2m allocated for just daily meals?
-We are told about GHC 600m out of this accumulated cash has been allocated to support small scale businesses, as we speak we are yet to feel anything of a sort.
-most health facilities and critical health workers are yet to receive PPE at their various working places, so they risk their lives while we have a budget for PPE.
-our testing regime is one of the weakest in the sub region and contact tracing is one of the poorest in Africa if not in the world.
-we have lost the containment battle and we are now having to battle with community spread of the virus.
As a taxpayer, are you satisfied with the way government is handling this pandemic with the loads of cash and fiscal space it has created? Aside the promises and some tax reliefs, can’t the government start mass testing to get the horizontal infections contained? With all these huge amounts and reliefs to the government, what exactly are the returns as far as the fight against Covid-19 is concerned? Are you safe? Do you have confidence in the government’s approach to issues?
Remember we have recorded over 2000 positive cases even without mass testing. Are you able to ask the question what will be the results if Ghana were to go for mass testing? Where is the money Mr President? Do you wonder why some MCE’s and Regional Ministers went to the Flag Staff House to negotiate for lockdowns in their respective regions and municipalities even without recorded or limited cases? Something might be leaking somewhere.
Stay safe! Stay home! Stop the spread!
By: Issifu Seidu Kudus Gbeadese