An Economist, Dr. Jerry Monfant, has dismissed the government’s convenient blame of the country’s economic woes on Covid-19, saying the problems are the cause of the Akufo Addo government’s poor handling of the Economy.
In an interview on Accra based Starr FM, Dr. Monfant said the mess had been developing even before the coronavirus pandemic would strike.
“Our economic situation is self-inflicted and not because of COVID19. Signals have to be sent to the people for them to know the economy wasn’t handled well. Government had a total policy credibility challenge with regard to economic policies and that has really brought us to where we are at the moment. You do the right thing at the wrong time,” the Economist said.
“For example, in 2016, the financial sector credit facility to the private sector amounted to 34% to the GDP. Exactly in 2018, when we started to be looking at even before we take a bite on the financial sector cleanup, the credit to the private sector went down absolutely to 26% up to the GDP. So, that tells you credit has stifled or is having a nose dive, people’s incomes had equally stifled, it wasn’t flowing.”
Ghana’s economy is now technically highly indebted and has reached unsustainable debt levels often dubbed “HIPC” following the 2002 World Bank/IMF debt forgiveness programme.
Ghana’s debt to GDP ratio projected to hit 76.8% by December and has accumulated over Ghc260billion in debts.
The Akufo-Addo government has been blaming the Covid-19 pandemic that recently struck as the cause of the mess, but experts have been pointing out that the mess had long begun before even Covid-19 would strike.
“We tend to believe that policy leakages have led us to where we are. Because the economy is not doing well and we don’t have any other alternatives, the situation is that we are putting more money into the economy and it means your production level is down,” Dr. Mofant said.
He added, “Our crisis and policy response should be cyclical rather than being pro-cyclical. Borrowing to run an economy can be done by anybody.”