Can we afford a Ghana with: no bad roads, decent homes for the working class, free quality tertiary education, an efficient free national health care system, clean cities, decentralized infrastructure, full employment, a social safety net for the vulnerable…? And this is not about politics; just a rethink of the economics we have always known.
25 years ago, our country started on a national vision 2020 development agenda to deliver a Ghana with a balanced economy, middle-income country status, a standard of living and a level of development close to the present level of development seen in Singapore. We soon wake up to the news of 2020's arrival and oh did it come with baggage; a global pandemic that shook the world and claimed the lives of many; and Ghana, a lower-middle-income West African country with a debt to GDP ratio soared to about 63% as a macroeconomic response. Well, along with the rest of the world, our country has come far. Today we may have progressed from where we started, but we are nowhere near where we should be. This may be attributable to a myriad of factors. Key among the many is the fact that we just cannot seem to generate enough by ourselves to fund the level of national development we aspire to. Our development budget is constrained by how much tax we collect and ostensibly, how much the west is willing to lend to us. But what if these constraints are somewhat self-imposed?
Currently, governments are likened to households who need to earn income (mostly through taxes) for expenditure. And just like households, governments are to take on debt to make up for their budget deficits when they cannot generate the required income through taxes. When debt rates get too high, the debt alarm starts to beep and sounds danger for the economy. But is a sovereign government really like a household? A government can issue its own money; households cannot. A sovereign government is not like a household and does not need to raise taxes or borrow to spend the money it can create all on its own. Hence, the question of constraint is no more about whether we have the money for development, it is rather about how much and what kind of development we can spend on such that inflation and currency depreciation stay under control. This, in essence, is at the core of the Modern Monetary Theory.