Money Matters:When the state and people are broke!
There is an air of despondency that refuses to freshen, says Bernard Otabil
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One theme that seems to run through most discussions, whether in print media articles or radio and television programmes, is that Ghana is broke.
How apt, one may say, but when you examine the multiplier effect of such sound bites on the mood and performance of the economy in general, one cannot help but pray for a significant shift from the current paradigm.
The shift is sincerely needed because unless of course one is trying to be mischievous with his or her analysis or comments, then we cannot exclude the fact that the world in general is broke.
So singing about the country’s nemesis is really not what is needed at this time. We need pragmatic solutions, home-grown remedies that could provide soothing comfort to the despondent.
Okay, so now that we have all admitted that the country is broke, let us consider the implications for all of us. But before l look at the implications, l am first going to attempt a definition of what makes Ghana broke.
The definition is, indeed, a challenge because the generally held view in financial markets, at least, that countries hardly go bankrupt, and, therefore, instruments issued by governments assume a risk-free posture- meaning that one has to be cautious in his assessment in order not to adduce bankruptcy to a country as you would in an individual or organisational context.
Playing safe, I am, therefore, going to turn to the longest serving Finance Minister of Ghana, Professor Kwesi Botchwey’s, assessment of critical economic situations that possibly point to hopelessness and, perhaps, a broke country with a broke people. Shall we? Good.
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Professor Botchwey in a recent public lecture said in 2014 alone, out of the projected revenue of GH¢24.062 billion, statutory spending on the wage bill, pensions, external loan repayments and various funds, among others would take 101.2 per cent.
“So we are basically living beyond our means and must borrow from the domestic and external markets to finance the deficits, including sovereign bond issues from the capital markets,” he said.
Also, the consequences of living beyond our means have been dire. Because there is always the need for the shortfall to be covered somehow, the government has had to borrow, as you would as an individual when the family budget is not balancing.
But the borrowing in this case has resulted in a huge public debt situation, more so as the graduation of the country to a lower middle-income status has reduced the country’s access to long-term financing from multilateral institutions such as the World Bank, which would have been cheaper than the currently available commercial sources.
Significantly, the bane of the country has been: Rising inflation, depreciating currency, rising interest rates and high twin deficits for two years (2012 and 2013) consecutively, with 2014 not holding much promise either.
So when a country is this “broke” what does the good old professor think of the people and, indeed, their general mood?
“I see a nation reeling in widespread disaffection; a bit of despair…, a popular mood that is marked by some frustration and rising cynicism about any and all utterances, explanations and assurances by the government and even by technocrats and public servants,” he said.
"I see a spill-over of this mood onto our roads in a breakdown of discipline as motorists take the laws into their own hands and defy traffic lights and the police. Motorists who drive on multiple lanes and on the shoulders of often badly designed roads, and in the process condemn law-abiding motorists to long hours of waiting in endless queues as armies of hawkers desperate to make a living thrust a bewildering assortment of words in their faces and into their cars.
•I hear this frustration in the scathing curses of angry motorists stuck in traffic as the odd dispatch rider doing his duty comes swooping by, ordering or often screaming at motorists to make way for some functionary in a hurry.
•It is also seen in the desperate faces of destitute who scratch cars or rain insults if one fails to offer help," he strongly added.
These are, indeed, not comforting words but, generally, are words that are meant to reflect the reality of what happens when a country and its people are broke.
But Professor Botchwey is not that cynical to make mockery of a serious situation. Not too long ago, referring to the same economy, he said: “Every economy has its ups and downs. Some of the problems have external causes and some are internal…… We are not going through a fatal crisis, although there are echoes of that, but it is our responsibility to step back to ensure that we deal with the issues one after the other.”
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So when a country and her people are broke, that is when financial discipline and, indeed, discipline of all sorts should guide your thoughts and actions. We must strive to replace despondency with hope in such situations.