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FULL SPEECH: Mahama speaks on Ghana’s economy

Former President John Dramani Mahama speaks on the Ghanaian economy on the topic ‘Building the Ghana we want’.
Attached below is a LIVE VIDEO of the speech from the event happening at the campus of the University of Professional Studies, Accra.

Attached below is a copy of the full speech

BUILDING THE GHANA WE WANT AN ADDRESS TO THE PEOPLE OF GHANA BY HE JOHN DRAMANI MAHAMA

INTRODUCTION

Good evening to you, wherever you are joining us from this evening – and, to all who made the time to join us here at the UPSA Auditorium as we talk about “Building the Ghana We Want.”

Thank you, Dr. Ato Forson, for the very concise and accurate presentation on the dire economic situation we find ourselves in as a country.

Your presentation has laid bare, the stark and objective, yet depressing reality of our country today, how we got here and the dreadful consequences that it has spawned.

GHANA’S ECONOMIC SITUATION TODAY

In the last few years, our economy has lurched from crisis to crisis, ultimately resulting in the most debilitating living conditions in several decades.

Within a space of ten months, our currency, the Ghana Cedi, has depreciated by over 62% against the US dollar which is the highest in recent memory.

Our public debt is projected to hover around GH¢ 522 billion by close of this year, with a corresponding debt to GDP ratio of above100%.

The debt service obligation arising from this, is monstrous and, is making it impossible to finance almost all critical sectors of the economy.

The wage bill has gone up due to unbridled recruitment into all sectors of the public service resulting from a poor capacity of the private sector to mop-up the teeming youth graduating from all levels of our educational system.

Worse still, Ghana has been classified as the country with the highest likelihood of debt default, which reflects the multiple downgrades by the international credit agencies.

As it stands, we remain firmly shut out of the international bond market.

Inflation is almost 40% and is set to rise higher.

Amidst contestations about the credibility of the method applied, some finance and economic experts believe that the reported inflation numbers, as with other economic indices, are worse than the published narratives.

Ghana is on record as having the highest food inflation in the world at 122% notwithstanding the much touted but grossly mismanaged Planting for Food and Jobs programme.

We are grappling with treasury bill rates of about 30% as local investors in our financial instruments suffer huge risks associated with lending to government.

We are also experiencing massive reverse capital flows as investors lose what is left of their confidence in our economy and pull out in droves. It is estimated that as much as $ 2 billion have been taken out of our economy by investors who fear the worse since the beginning of this crisis.

Cote D’Ivoire and other neighboring countries have become the latest operational destination for many multinational businesses, while others have pulled out completely from Ghana.

These are not just abstract numbers or vague data constructs. They offer a bird’s eye view of the state of our economy, and translate into our everyday lives, our daily suffering, and struggles.

They underscore our reality, and the devastationmillions of Ghanaian households are going through today.

Ladies and gentlemen, the daily price increases, unending fuel price adjustments, ever-rising inflation, a fast-depreciating currency, corruption, arrogant and insensitive leadership, and the waste of scarce resources, have combined to make life simply unbearable for the generality of Ghanaians.

Prices of items including everyday medication, salt, gari and cooking oil, are constantly on the rise.

If you do not buy an item at a particular point in time, you are likely to find that the price hassignificantly increased a few hours later.

The mortgage market is collapsing and is threatening the financial plans of many families.

Mothers suffer heartbreak each day because they cannot afford to feed their children like they used to.

Countless young people with enormous potential are struggling to pursue their lifelong dreams because of financial problems.

Small entrepreneurs are frustrated as they break their backs to keep their businesses open against great odds.

This is not just an instalment in cyclical hardships, and we should not pretend that it is.

Investments have been lost; businesses have been destroyed; the pharmaceutical sector threatens to increase prices further and are threatening to re-introduce the obnoxious cash and carry system.

People have been struck by sicknesses and are unable to seek medical attention, due to prohibitive costs and regrettably some have paid the ultimate price with their lives.

The standard of living, purchasing power, life savings and quality of life of the ordinary Ghanaian is depreciating by the day.

Many are terrified that tomorrow may be worseas they grapple with uncertainty of our current situation.

The signs of this crisis have been there since 2018 when alarming increases in our public debt levels and huge expenditure overruns became apparent.

The NDC did not keep quiet when it became obvious that we were heading for a ditch.

We spoke up. We advised government. We made suggestions. I even asked government to desist from the creative accounting through which Finance Minister Ken Ofori Atta was selective in presenting budget data and thereby creating a picture that was rosy but far removed from reality.

All these fell on deaf ears.

Government became even more brazen and reckless and took their mismanagement to dizzying heights in the run up to the 2020 elections amidst boastful claims that they were the best managers of the economy.

Immediately after the elections, it became clear that we had been thrown into a bottomless pit of debt, staggering budget deficits and a rapidly deteriorating fiscal position.

The looming disaster at the time required an urgent response.

Even as the crisis deepened earlier this year, we in the NDC beseeched government with many prescriptions, which I articulated at the “Ghana at the Crossroads speech” in May this year and urged Government to seek multilateral assistance urgently.

Among others, I also called on President Akufo-Addo to expeditiously convene a national dialogue on the economy at which the best and brightest minds our nation has, could huddle together, and formulate a robust response to our challenges.

I guess it is too late for that now.

I re-echoed demands by Ghanaians that the finance minister and the Chair of the Economic Management Team, who have been primarily responsible for this economic catastrophe, be relieved of their positions to breed confidence among stakeholders and offer the economy a new lease of life.

I asked that the President deploys some of the arsenal in the Presidential toolkit and reshuffle his government to inject innovation and freshness of thinking into the running of the country.

I also asked that the President addresses the nation to inform the public of the specific steps he was intending to take to weather the pending economic storm.

This address was meant to calm the anxiety of the investor community and rally Ghanaians behind any such efforts.

Regrettably, the President dug-in and failed to do any of these.

Let me note that, since this event was advertised, I have been made aware that the President intends to address the nation sometime this weekend.

It is my prayer that his words would strike the right chords in the hearts of Ghanaians.

Since my speech in May, the situation has spiraled out of control and the effects have been calamitous for all of us.

The temptation to say “I told you so” may be strong, but we do not believe that this is the time for vainglorious pursuit of vindication, and neither is there any room for gloating.

Even now, as Ghanaians continue to suffer,there is a desperate effort to shift blame.

In almost robotic fashion, Government and its hirelings recite in unison, that we are at this perilous juncture only because of COVID-19 and the Russia – Ukraine conflict, despite overwhelming evidence to the contrary.

In fact, because of COVID-19, this government received more than a $6 billion windfall from both domestic and external source.

But for the deep hole in our finances and the reckless election 2020 expenditure, this should have been sufficient to protect Ghanaians against the disease and promote post-pandemic economic recovery.

There has been a desperate attempt at “political equalization” by propagandists and supporters of the Government – claiming that all political parties are the same.

Subtly, they are attempting to suggest that no other person could have done better; or that all political parties in Ghana cannot be differentiated ideologically.

For the avoidance of doubt, we in the NDC will not have dared been as reckless, nor would we have been allowed to be as irresponsible in the handling of the public purse and the nation’s resources as the NPP has been.

We’ve had our own set of challenges in government but nothing we did, or the outcome thereof, has come anywhere close to the disaster unfolding before our eyes today.

To be clear, we are in this mess because an untouchable finance minister, relying on his Databank workers, and neglecting the advice of seasoned experts at the Finance Ministry, has been left to run this economy into the ground.

We are in this mess because a so-called “solid economic management team” over the last few years, has been unable to call the President’s cousin to order when he embarked on a reckless borrowing spree, indiscriminate closure of indigenous banks and financial institutions, and creative presentation of economic statistics to make our situation look rosier than the reality.

We are in this mess because we have a President who fails to take responsibility and has instead left the nation on autopilot in the hands of bungling ministers who he describes as “excellent”.

Last December the President is on record as having said the present economic mess is not his fault.

For emphasis, the biggest blame for the current tragic situation with our economy lies with the very people charged with managing the country—not with the pandemic, not with the war— our country has been unprofessionally, and Ghana has been treated like an experimental playground and a family heirloom.

And I regret to say, this was all avoidable.

Things could have been different, and I remain very convinced they could.

Ladies and gentlemen, I want to re-state what I have said over the years – we are ever ready and willing to share pragmatic steps that will help put our nation back on track.

Ideally, backroom channels of communications should exist between the ruling party and theopposition to allow for exchange of views on important matters to the benefit of Ghanaians.

Unfortunately, that has not been the case under this government for which reason we in the NDC are compelled mostly to engage the people of Ghana directly on some of the things we believe ought to be done to mitigate the untold suffering of our people and get the economy back on track.

Even though Government has requested for an IMF programme, the lateness of the decision and the extent of economic decay means an early approval of a Fund programme could prove elusive.

It may take a couple more months before an agreement is reached on a programme with the Fund.

In the meantime, there is the need to stem the rapid decline in the economy and reduce the unbearable hardships Ghanaians are facing.

It is for this reason, that I intend, today, to dwell more on solutions as the state of the economy and its fallouts are well known to all of us.

SAVING GHANA

We have already put out an eleven-point proposal that could have arrested the decline before we got to this critical point.

Many of those proposals outlined in my ‘Ghana at the Crossroads’ speech are still relevant and can be implemented, even if belatedly, to help address the problems we face.

Many months after government reluctantly requested for an IMF programme, it has failed to coordinate and communicate any credible Home-Grown Plan for consideration by the Fund and the Ghanaian people.

When we approached the IMF for a programmein 2015, we did so only after putting together a robust Home-Grown Programme, which the IMF adopted almost entirely, save for minor additions.

Ladies and gentlemen, the immediate causes of the economic disaster we face are the unacceptably high public debt occasioned by a reckless borrowing binge, and an exceptionally large budget deficit, arising out of over expenditure.

These two problems – debt and deficit – have undermined confidence in the economy andcreated very serious solvency problems for government.

This has set us up on a vicious cycle of debt and even more debt.

Tackling these twin challenges would mark the beginning of the much-needed recovery.

We note that some discussions are reported to have been negotiated between government and stakeholders on a domestic debt restructuring plan as part of the preconditions to secure an IMF programme.

This simply means that after mismanaging the economy and creating this crisis, Ghanaians and others who have invested their hard-earned money in government bonds and other instruments or executed contracts and suppliesawaiting payment, will be asked to forfeit part of the interest due them and a significant part of the principal when it falls due, or arrears owed them.

This is a most unfair and unjust proposition.

It is not fair for innocent people, investors, and business owners to lose their investments, when those who took the decisions and whose incompetence and mismanagement havebrought us to this situation, are not only still at post, but are praised and protected by the President.

The President must not only replace the finance minister, he must also reconstitute and take control of the Economic Management Team himself.

I have noted the recent draft motion of censure by the Minority against the Minister and the recent rebellion of the Group of 95 Majority members calling for the removal of the Minister.

I have also noted the statement by the Majority Leader of a compromise reached that the Minister will leave after he has completed the budget and IMF negotiations.

I think this is untenable.

Budget preparation and IMF negotiations are the result of teamwork, not the work of one individual. I fail to see how the absence of the Minister will affect the preparation of the budget or the negotiations with the Fund.

There surely must be persons with the requisite experience to carry on this work. Afterall what happened to the “We have the men” mantra?

For us in the NDC, our position is that any debt restructuring must not place the absolute burden on only the domestic debt.

Restructuring of our debt must cover both domestic and external debt.

Ghanaians in the last few years have suffered severe erosion of indigenous capital.

The banking sector clean-out led to loss of jobs and erosion of capital of many Ghanaian families and businesses.

Any debt restructuring restricted to cover only domestic creditors would lead to a further erosion of local savings and capital and would also severely weaken the Ghanaian banking sector.

BUILDING THE GHANA WE WANT

a) Reducing the public debt, debt service obligations and creating fiscal space

The biggest problem with our economy today is the huge size of our public debt, estimated to be around GH¢ 522 billion by close of this year. This must immediately be tackled and stopped from growing further.

To achieve this:

1) An immediate moratorium must be placed on all non-concessional borrowing.
2) Government must actively canvass our bilateral partners for more concessional financing and grants.
3) There must be a stop to Central Bank financing of government above the 5% threshold. The current printing of money to finance Government’s deficit is further fueling inflation.
4) Government must stop collateralizing statutory funds for the purpose of taking on more loans. The wanton collateralization has been unhelpful.

It has limited the financial space of the statutory funds, including GETFund, and the District Assemblies Common Fund.

Government should de-securitize these funds and add them onto the public debt as part of the discussions on debt restructuring.

We estimate that if the proceeds due ESLA, GETFund, Road Fund etc., are freed of the burden of collateralization and IPP payments are renegotiated, government would have access to a total of about GH¢ 16 billion in 2023, GH¢ 17.6 billion in 2024 and GH¢19.4 billion in 2025 from these funds alone.

This would significantly ease the cash-crunch, which has crippled many sectors resulting in government’s inability to meet such basic obligations as supplying food to secondary schools and providing textbooks for basic schools.

EXPENDITURE ITEMS FOR CONSIDERATION

ITEM

2023 INDICATIVE (GH¢)

2024 INDICATIVE (GH¢)

2025 INDICATIVE (GH¢)

GETFUND

2,602,792,390

3,009,461,440

3,743,993,613

ROAD FUND

1,949,296,790

2,210,728,337

2,427,680,636

MIIF

1,817,296,790

2,005,210,007

2,329,783,372

ESLA PLC

5,028,665,684

5,715,321,520

6,480,628,825

ENERGY SECTOR IPPs

4,605,709,092

4,533,751,656

4,437,982,034

TOTAL SAVINGS

16,003,903,956

17,614,472,960

19,420,068,034

We also recommend that legislation be passed by Parliament to prevent the collateralization of statutory funds to ensure that the current problems do not recur.

5) Government should also begin work to amend the enabling legislations of some state-owned enterprises like the Ghana Cocoa Board to prohibit them from engaging in non-core, quasi-fiscal functions.

COCOBOD is currently reeling under a debt of about GH¢ 14 billion and is severely distressed, putting further strain on government finances.

The astronomical debt has so crippled COCOBOD and made it impossible for them to pay bills due the licensed buying companies and their suppliers.

This debt overhang has affected the Produce Buying Company, which is currently unable to pay the salaries of its workers.

Indeed, similar liabilities within other state-owned enterprises amount to a staggering GHS 30 billion and is impacting the public debt.

6) One of the biggest sources of suffering and difficulty for Ghanaians today, is the cost of fuel which has skyrocketed to the highest levels in our history due to the rapidly falling cedi and is affecting everything else on the market.

Something needs to be done about it.

Ghana is making huge windfalls from the sale of crude oil, royalties, tax payments, surface rentals and others.

Section 4.1 of the 2022 semi-annual PIAC report confirms that an amount of $731.94 million was realised from Ghana’s oil resources in the first half of 2022 alone.

This amount is equivalent to about GH¢8.7billion, surpassing the total projected Petroleum revenues for the whole of the 2022 financial year estimated at GH¢ 6.6 million (refer to paragraph 253 of the 2022 annual budget statement presented to Parliament in November 2021).

The Government can apply some of these huge windfalls to cushion consumers. In addition, other revenue handles have witnessed significant positive out-turns.

For instance, the 2022 Fiscal Data report from the Ministry of Finance reveals that for the first two quarters of the year, the Price Stabilisation & Recovery Levy (PSRL) alone has so far accrued over GH¢ 798 million as compared to a projected target of GH¢269.3 million, which is almost 200% of the revenue target.

The Government must therefore apply the PSRL to the intended purpose and cushion petroleum consumers.

b) Cutting cost, reducing waste, and spending wisely
One other major problem that has brought us to this point is the reckless and frivolous spending of our scarce national resources.

A fundamental principle in economic management is fiscal discipline even in times of crisis.

It is simply not possible to live beyond our means and avoid the kind of economic turmoil we are in today.

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