Former Finance Minister Dr. Kwabena Duffuor has called on the government of Ghana to take urgent measures to bring Ghana out of the current economic hole in order to prevent the country from defaulting on its current looming debt levels.
He debunked the assertion that Ghana’s economic difficulties and alarmingly depreciating currency is due to the Covid-19 pandemic and the Russia-Ukraine war.
‘’Fifteen African countries have registered single-digit inflation during this same period including Togo, Ivory Coast, Morocco, Kenya, Uganda and so on. These countries didn’t jump over Covid-19 or the Russia – Ukraine war. We are doing something wrong in Ghana, it is a leadership problem’’.
Dr. Kwabena Duffuor who was speaking on Upfront, a Joy News TV show on Wednesday also attributed the pressure on the Ghanaian currency to a lack of US dollars in the system as a result of excessive government borrowing as well as structural defects in our mineral and oil export arrangements to balance our payments.
‘’Less than 20% of our total export earning impacts on Bank of Ghana’s cash flow, according to data from the Ministry of Finance itself. That is a big problem’’. He continued, ‘’ take for example oil exports for 2021. Ghana exported 3.9b USD worth of oil but Ghana actually earned only 513m USD out of the total export while 3.4b USD went to the owners of the oil companies’’.
He added, ‘’at the same time Ghana spent 2.7b USD to import petroleum products for our own local consumption and this is where we have the structural difficulties with our balance of payment’’.
The former Bank of Ghana governor asserted that our mineral industry is not different from the oil industry. ‘’Only about 20% of our mineral exports impacts on our cash flow because out of 14.7b worth of mineral exports in 2021, not more than 4b impacted on our cash flow so only cocoa remains our backbone while oil and minerals belong to foreigners’’.
Dr. Kwabena Duffuor blamed this foreign currency cash flow issue on the concessionary model used by governments in the distribution of mineral and oil revenues between government and foreign companies and called for its replacement with the participatory model to ensure maximum benefit to the Ghanaian people ‘’otherwise, our gold and our oil is not for us’’ he stated.
Dr. Kwabena Duffuor said Ghana’s economy faced similar challenges of inflation during his time as finance minister under President John Evans Atta Mills but working with ideas from the Economic Advisory Council set up by President Mills and whose members included the World Bank economist Dr. Gobind Nankani, Professor Kwesi Botwe, Togbe Afede XIV, and others, they formulated prudent monetary policies to stabilize the cedi.
"We cut down government expenditure drastically especially when there is a revenue shortfall and you cannot borrow anymore. This government must do the same. Government must also desist from destroying institutions such as the judiciary and the banking sector because it leads to too much uncertainty in the system. Who wants to invest in an uncertain environment?’’ he asked.
He suggested as a solution that the Bank of Ghana buy all the gold from all gold exporters (Ghanaians and foreigners) even if at a premium price and leverage the gold to stabilize the Ghanaian currency.
"If BOG organizes all the gold exporters, buys off all their gold and also gathers the projected data from the gold exporters, there are two things the government can do with it to stabilize our currency’’, the former governor explained. ‘’Government can sell the gold forward with instruments to bring more dollars into the system. Secondly, the government can use the projected data from the gold exporters for swap arrangements for more dollars to pay off some of our debts and to import goods and services and to take pressure off the Ghana cedi. This can be done and this is my suggestion’’.
He said with the swap arrangement, we are not selling the gold but only swapping it for foreign currency in the meantime to take off the pressure on our local currency and the BOG can always have the gold back when they have enough dollars in the system.
The former finance minister said the government must do some of these things urgently because the country is sinking and cannot afford to wait for the IMF. ‘’We’re the most indebted country in the world after El Salvador and that’s why the rating agencies are focusing on us. It is a structural problem but it is also a leadership problem’’.
Source: King Edward Ambrose Washman Addo/peacefmonline.com/ghana
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Ghana is sinking because you cannot get the chance to loot this country again. Pay the depositors money your bank owe. Any body who sees danger of his place of abode is sinking and does not run away should not be trusted. After all you and your son bought properties in South Africa, Sweden and many European places with depositors and bailout money, you can relocate. Azaa bamboo, you want to lead the NDC so you want people to hear your voice, stop the hair dye and lets see your real identity.
Bring the stolen money you took from your bank and Ghana will be fine. Akuffo Addo is weak that is why people like you is walking freely and talking ***barred word***. Your party have been in power for 27 years, show us what you did. Wait for Kennedy Agyapong to come you all are going to prison.
Good ideas but why wait until now?!! Why act like the hyena, yo kept circling within the corridors of power as the Governor of Bank of Ghana and then a cabinet minister as the finance minister, why did you not propose these good ideas? Sometimes, its becomes quite easy to believe that the balck man is evil.
Wasn't your time that Mahama took us to the IMF?
Kwabena Duffour, you mean Ghana is sinking, i can't help but trust what you are saying because you have sat on the finance ministers seat before, you were once the governor of the bank of Ghana, your signature was on our currency. Now the challenge facing the 2017 elephant is that it has big ears as usual unfortunately it doesn't listen, at best it hears but won't listen. If your mother is dead and you keep arguing she's sleeping, when mothers are sending food to their children, we will see who will sleep on a hungry stomach. Every day Russia/ Ukraine, I doubt if citizens of the two countries are going through the mess Ghana currently finds itself, how can you be crying more than the bereaved. The people kept cautioning you, slow down with some of your expenditures, but because you don't listen, chinchiinaaa you went ahead to do as you wish, today see where you have sent the country to. A very promising, vibrant and dynamic people who gave their trust to people who were wolfs in sheep skin. If you succeed in cheating someone, don't think that person is a ***barred word***, that person trusted you much more than you deserve. But for trust if the presidency/ ministerial posts were by examinations, how many of you will come near, none or they will write and trail.