Franklin Cudjoe writes…
December 2022 was the most momentous month in Ghana’s recent economic history. Inflation had completely ravaged citizens’ savings at 54%!
After struggling to manage its debt, Ghana’s government had to resort to measures never witnessed in the last 50 years- officially defaulting in paying its debts, setting in motion multiple and confounding debt restructuring scenarios.
The debt restructuring was painful- from literally pickpocketing savings, giving dangerous financial haircuts on savings and investments to offering carrots in exchange for extended periods of repayment at discounted interest rates.
Many Ghana analysts were worried that the vice-president and his economic management team, hitherto described as the “solid team” had simply become derelict, unresponsive, impotent and completely lost on what to do.
The economic management gurus tacitly agreed with the draconian and undemocratic means of paying odious debt accumulated recklessly through deceptive projects and programs dumped at the most useless and corrupt ministry ever to be created in Ghana’s history- the Ministry of Special Development Initiatives.
These measures are still in place- E-levy and other 39-something pernicious taxes- including the worrying COVID-19 recovery tax which culminated in the theft of the latter- a special audit by the Auditor General revealed only 25- 30% of all COVID-19 funds were used for covid-19 related matters.
You would have thought that it was time to take stock, salvage the situation & rally around a national plan for recovery. Sri Lanka is doing just that and achieving tremendous results.
Sri Lanka’s government working with the country’s Central Bank has reduced its inflation to -0.7%, Yes Negative 0.7%. Meanwhile, a year before Ghana crawled to the IMF, Sri Lanka defaulted on its debt, and after multiple failed negotiations managed a $2.9bn program with the IMF. This was after chaotic demonstrations and chasing the president and his ministers out of office.
Sri Lanka today is coming in from the cold and acting very sensibly.
Ghana received $3bn from the IMF and got more money from other multilateral financial institutions.
Inflation is nearly 25%, and its Central Bank is padding contract numbers with close to $300m spent on an office complex that isn’t reflective of a broken economy.
The Central Bank was forced to admit it printed and distributed money to fund completely deranged government projects such as 1 village-1 dam leading to 60bn cedi debt. The head of the central bank along with his directors have chosen silence over perks. Yes, perks that will shock you.
You want to believe in the profligacy of the laziest, arrogant, most incompetent, corrupt, and expensive lot we live by today? Good luck!
