“Our economy is in tatters, largely because it is self-inflicted. The government inflicted it on us and failed to act.” Dr Cassiel Ato Forson, Minority Leader in the Ghanaian Parliament, made the statement quoted above in the House, in response to President Addo Danquah Akufo Addo’s State of the Nation Address (SONA) on March 8, 2023.
Seconding the motion for adjournment, Dr Forson said: “Mr President, there is, indeed, widespread disenchantment among our people.
“Millions of Ghanaians are going through unbearable hardships and excruciating pain.
“Our economy is in the worst shape it has been in decades.
“Ghana’s economy is bankrupt or insolvent.
“Mr President, this is your score time and this is the true shape of our nation.
“Our position is that inflation is currently rising. Monetary policy rate is also at 28 percent. Ghana Cedi has depreciated by 20 percent in January alone.
“Mr President, unemployment is exceedingly high at record levels and, as we speak, Mr President, lending rates are at 40 percent,” he added.
President Akufo Addo had earlier presented the State of the Nation Address in a different way.
He dispensed with the usual SONA format and concentrated on the national economy.
The President spelt out, in detail, how the present economic crises happened and the measures his government had and would take to solve the problems, stabilize the economy and bring it back to the path of continued growth.
“Our currency has been buffeted; our inflation rate has been very high and, for the first time in our lives, debt exchanges have become the language of everyday conversation.
“I have said and many others, including the Managing Director of the International Monetary Fund (IMF), have said that our economy was doing well until COVID-19 and the war in Ukraine took us off course.
“Maybe because of the severity of the present difficulties or maybe because it suits their preconceived agenda, some people are unwilling to accept that we were on a good trajectory until the arrival of COVID-19.
“This is what I told the House (Parliament) on 20th February, 2020 and I quote: “Mr Speaker, in three years we have reduced inflation to its lowest level, 7.8 percent in January 2020, since 1992.
“For the first time in over 40 years, we have had a fiscal deficit below 5 percent of GDP for three years in a row.
“For the first time in over twenty (20) years, the balance of trade (that is, difference between our exports and imports) has been in surplus for three (3) consecutive years.
“Our current account deficit is shrinking, interest rates are declining and the average annual rate of depreciation of the cedi is at its lowest for any first-term government in the Fourth Republic.
“Our economic growth has rebounded to place Ghana among the fastest growing economies in the world for three years in a row, at an annual average of 7 percent, up from 3.4 percent in 2016, the lowest in nearly three decades,” he added.
President Akufo Addo dwelled on the COVID-19 pandemic and the havoc it had caused the country and the economy. He dismissed suggestions that the COVID-19 funds were spent recklessly.
On borrowed money, he said that the loans were applied to provide public infrastructure and others.
“There were massive developments in agriculture, education, health, irrigation, roads, rails, ports, airports, sea defence, digitisation, social protection programmes, industrialisation and tourism,” he added.
Is Ghana’s economy bankrupt?
What is bankruptcy? What is insolvency?
According to Wikipedia, bankruptcy is “the legal process through which people or other entities who cannot repay their debts to creditors, may seek relief from some or all their debts.
‘’In most jurisdictions, bankruptcy is imposed by a court order often initiated by the debtor.”
Insolvency is the term used to describe a situation, according to Hutchinson online, “when an individual or company cannot pay their debts as when they are due”.
Can a country become bankrupt?
According to a writer of an article published in India Times, “It is incorrect to say that a country is going bankrupt”.
Referring to the recent near collapse of Sri Lanka’s economy, the writer stated, “We ought to understand that when a country fails to pay its debts, it does not declare bankruptcy; instead, it defaults on loans.
“And one should remember that the defaulter is the government, not the country.”
Government, in this wise, means all governments of a country that had borrowed money, cumulatively, and that led to debts default.
In the Ghana case, the records show that the National Democratic Congress (NDC) government had borrowed more money than the New Patriotic Party government.
For example, in January 2009, Ghana’s debts were GHC9 billion. The debts increased to GHC 122 billion in December 2016.
The NDC should, therefore, be honest and bold to accept not only moral, but also actual responsibility, for part of the debts its government had incurred.
On developed countries’ debt defaults, the Indian Times writer cited Greece as a country that had been in loan defaults a number of times.
Greece had its first default in 377 BC.
Since independence in 1829, Greece’s government had defaulted on loans for more than half of the nation’s history”.
He mentioned Spain as another developed country with the highest rate of loan defaults in Europe.
Spain, he added, defaulted in its debts 15 times throughout the 18th and 19th centuries.
He recommended the IMF approach as a way of seeking help to avoid loan default.
An IMF member country could resort to the IMF for bailout or technical assistance, but also engineering skills to monitor the bailout package.
“When people or institutions go bankrupt, lenders acquire their assets.
“However, a country’s assets cannot be purchased nor can foreign lenders be forced to pay the money owed to the government,” he added.
On the causes or origins of Ghana’s current huge debts and other financial problems, it is not correct for Dr Ato Forson to imply that Ghana’s present financial crises were self-inflicted.
The IMF Managing Director, Kristalina Georgieva, and the German Minister of Finance, Christian Lindner, had confirmed that the financial problems confronting Ghana were caused by external factors, such as, the COVID-19 pandemic and the Russian-Ukraine war.
In their 2022 Bali summit communique, the G20 member countries acknowledged the fact that COVID-19 and the war in Ukraine were causes of the high-indebtedness of developing countries, including Ghana.
The final analysis is that a country cannot declare itself bankrupt or be declared bankrupt by a court.
A country cannot become insolvent to the extent of it being liquidated and its assets sold out by its creditors.
We have challenges when it comes to the training of teachers in Ghana – Teacher Assessment Consultant
Teacher Professional Development Expert and Assessment Consultant, Professor Jonathan Fletcher has bemoaned the low standard and the orientation of Ghana’s teacher education institutions and the training of teachers.
His concern comes on the back of the failure of Over 6000 teachers out of 7,728 who sat for the teacher licensure exams last month as was disclosed by the Registrar of the Ghana Teacher Licensure Examination (GTLE), Dr. Christian Addai-Poku.
The Teacher Professional Development expert made his point on 3FM Sunrise Morning on Thursday 22 May, 2023 that we need to make sure that the right people get into the teacher training institutions. Then again, the more you get people in, and you don’t match it with the right resources, that is what you are going to get.
“How are you going to have one hundred people in a class? Elsewhere the teachers are not even trained in institutions like that; teachers are going to teach in schools and that is where they are trained. In the schools, they have training classes, and they work with real teachers. If it is a university program, they only go to the university maybe once or twice a week” Prof Fletcher stated.
He explained that having a large class size undermines effective teaching and learning since a teacher is handling more students, it makes it difficult to effectively assess and supervise the trainees.
“In the first place we have challenges when it comes to the training of teachers therefore, I wouldn’t say anybody who has come out of a teacher training programme is hundred percent prepared for the work. People have to learn on the job and the first thing is to make sure that people who are actually going to do the job have the commitment and secondly are prepared” he said.
According to the consultant, the system makes it difficult to assess the many teachers so there is the need to find a way to ensure that before they go out and teach, they are well prepared hence there is nothing wrong with the licensure exams because it will help all.
“If you have one teacher training a hundred trainees, how many of them can the teacher know and have a one-to-one session with? That is impossible, whereas elsewhere every student will have a one-to-one with a teacher. It is like producing people on a conveyor belt,” he bemoaned.
$600m first tranche of $3bn IMF cash has been received – Finance Ministry confirms
The Ministry of Finance has confirmed that the first tranche of $600million of the $ 3 billion Extended Credit Facility (ECF) has been received by the Bank of Ghana (BoG).
The cash, according to the Ministry, is to help restore macroeconomic stability, sustain the country’s debts and lay a strong foundation for inclusive growth.
“The first tranche of $600million of Ghana’s low interest of $3billion Extended Credit Facility has been received to help restore macroeconomic stability, sustain the country’s debts and lay a strong foundation for inclusive growth,” the Ministry tweeted on Saturday, May 20.
The first tranche of $600million of Ghana's low interest of $3billion Extended Credit Facility has been received to help restore macroeconomic stability, sustain the country’s debts and lay a strong foundation for inclusive growth.
— Ministry of Finance, Ghana (@MoF_Ghana) May 20, 2023
Finance Minister Ken Ofori-Atta earlier stated that the second tranche was expected to be received in the next 6 months.
Speaking at the IMF-Ghana joint press conference held in Washington on Thursday, May 18, he said “There is a 600million Dollars release, I am sure we can get it by tomorrow, and in the next 6 months it is going to be another 600million dollars and then we have about five different tranches in the periods forward to get to the $3billion.”
The IMF Mission Chief for Ghana Stéphane Roudet indicated that the $3 billion bailout would result in reforms in the energy and cocoa sectors.
Also, he said the programme would result in reforms to encourage private sector investments and also build international reserves.
“There will be reforms in the energy and cocoa sectors,” he said during a joint Ghana -IMF press conference.
“It will be restoring macroeconomic stability, for higher and more inclusive growth. It has reforms that will make the economy more resilient and likely to withstand shock in the future,” he added.
The Board of the Fund unanimously approved Ghana’s bailout on Wednesday, May 17 at a meeting in Washington after Ghana secured the Paris Club financing assurance on Friday, May 12.
HUNDREDS OF NIGERIEN STRANDED FOLLOWING DEMOLITION OF THEIR HOMES IN TEMA
Hundreds of squatters at a slum area in Tema Newtown waterland, a suburb of Tema, have been rendered homeless following a démolition exercise carried out by a developer on the land they were occupying.
The victims mostly Nigerien traders who have been living in the area for the past 15 years say their former landowner who has since sold out the land to a new buyer, has refused to compensate them despite monies being allocated by the new owner for such purpose.
The over a hundred Nigerien traders who have been living in Waterland, a slum suburb of Tema Newtown, returned home last weekend to meet their place of abode demolished by a developer who is reported to have purchased the land hosting them from their landlord. According to the displaced squatters, even though their former landlord did hint to them at his intention to sell off the land and the need for them to pack out from the place, the sudden démolition of their structures without any prior notice was inhumane.
They claim they have been forced to live under the scorching sun with their families since their landlord failed to compensate them as per an agreement between the former and the new landowner.
Mohammed Illias, an opinion leader in the community who is championing the course for the displaced squatters to be compensated, urged the former landlord whom he claimed had been given money to compensate the squatters to do the needful or else risk cutting the anger of the community members.
Meanwhile, checks indicate that the National Disaster Management Organization have begun arrangements to support the displaced squatters who are currently sleeping in the open at waterland.