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We disagree with Dr. Duffuor

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Fri, 03 Jul 2009 | Print | E-Mail | PDF | Graphics Version
Editorial

The Minister of Finance, Dr. Kwabena Duffuor has told Citi FM, an Accra based radio station that the $535 million loan that has been approved for Ghana by the World Bank (WB) has no conditionalities attached to it, because of the prudent financial policies that the Atta Mills administration is pursuing.

“Our fiscal consolidation program that we indicated in the budget is working and we have managed to stabilize the high depreciation rate of the cedi. All these are an attestation to the fact that we are on course and the World Bank (WB) thinks that we are capable of meeting our targets”, the radio station quoted the Finance Minister as saying on its website.

The Chronicle is happy that the government has managed to secure such a loan which is part of $1.2 billion that the bank has promised the government within the next three years. It would be payable within 40 years with a grace period of 10years.

There is no doubt that it would help to shore-up the fallen cedi and stabilize the economy that has been bedevilled with huge deficits. There are even reports that another Breton Wood Institution, the International Monetary Fund (IMF) has also planned to lend to Ghana a whopping $1 billion, beginning from this month (July).

The Chronicle thinks the gesture from the two Institutions, who are supporting us with a record $2.2 billion show the kind of confidence that they have in the government. Surely, these loan facilities did not come on a silver platter, the government has to work hard for the money, and we commend the entire negotiating team for the good work they have done. It is our hope that parliament would also do its part by approving of the facilities to enable the government have access to the funds.

The Chronicle, however, disagrees with claims by Dr. Duffuor that the loans have no conditionalities attached. We do not want to believe that the seasoned banker was trying to be economic with the truth. Part of a statement issued by the World Bank office in Accra and made available to the press states: The second facility will take place in the third quarter of 2009, immediately after the Government has completed the actions it has committed to take.

These actions include Structural measures: Reconstituting the Boards of energy related regulatory utilities and authorities, adopting an electricity sector financial recovery plan, adopting draft legislation on the Ghana Petroleum Regulatory Authority and Oil and Gas Fiscal Regime, designating a leader in Government for the Public Sector Reforms agenda, and eliminating ghost workers in health and education services.

We are not experts in finance but we can deduce from the above statement that the government would have to remove subsidies on electricity tariffs and implement full recovery measures in the petroleum sector which we are beginning to witness. This is where we have the problem with the loan facility, because majority of Ghanaians are poor, and therefore implementing such a policy would make their lives very unbearable. Already, there was hue and cry when the government made the recent 30% adjustment in the prices of petroleum products. One can, therefore, imagine what would happen if this full cost recovery policy is implemented.

The Chronicle is, therefore, urging the government to come out with more pro poor social services that would cushion the people against this policy. Conscious efforts must also be made to pay the Ghanaian worker very well. Anything short of this may not help an already bad situation.

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