It’s time to renegotiate mineral and oil contracts
In times like these, when a country’s economy has gone bust, as a result of mismanagement, what leaders and nations require is candor. Some honesty with the Ghanaian public would do all of us a world of good. Instead of falling over ourselves in celebration for securing an IMF deal, government should be candid with the people about the burden the deal imposes on Ghanaian citizens.
While salaries of government workers are not expected to go up, workers are expected to pay more in personal income tax; to pay more on energy, water and phone bills; and more on transport, food, healthcare and education for their families.
The solutions can’t be business as usual. And Imposing additional burden by way of taxation has proven to be too stale and not a sound solution. You cannot tax your way out of a deep hole.
One of the things we can and ought to do is to renegotiate our mineral license contracts. It is a know fact that we do not make much from the oil and mineral deposits. Countries that have enjoyed the full benefits of their oil and mineral deposits fully own them. We, on the other hand don’t own our gold; we lost our first spot as a global cocoa producer to the Ivory Coast; and not much has come to us by way of oil revenue. Any government that can renegotiate all our mineral contracts would rake in billions in revenue than we already receive.
Secondly, a significant reduction in the size of government is a MUST. I still struggle to understand why the president would not significantly reduce the size of his government. It just does not make any sense, to keep an overblown retinue of friends, associates and Party apparatchiks in government while families struggle in the country. Instead of increasing taxes, that is where to start, a significant reduction in the size of government.
Another area which has been under explored and has to be looked at is reaching out to our friends in the gulf. Whether in Riyadh, Doha, Kuwait City or Dubai, there are untapped opportunities for interest free financing of roads, hospitals, energy and other sectors. We need these kinds of projects to spur growth. The sad reality is, officials are often interested in personal gifts than discussing assistance to build railway, or expand electricity coverage.
We’ve had a very good relationship with Saudi Arabia since the sixties. Certainly we can derive more from that friendship than asking for free Hajj tickets, the construction of mosques and date fruits during Ramadan while the communities where these mosques are often constructed lack roads, science laboratories, libraries and hospitals.
I have had the privilege of engaging Saudi officials in Accra and Riyadh. They have often lamented privately about their willingness to Finance bigger projects and how Accra has often not been proactive. Islamic banks are willing to offer unconditional and interest free loans when the right doors are knocked on by those in authority.
As things stand now, we are in dire straits. Seasoned economists like Dr. Nii Moi Thomson, Prof. Peter Quartey, and Dr. Sa-ad Iddrisu have sounded alarm bells, warning government of the dangers; of a looming banking crisis (job losses and defaults) if government is unable to secure $1.5billion by July 2023 or take the necessary action to stop the nose dive. We are more than likely not going to secure the $1.5billion support to setup the Ghana Financial Stability Fund (GFSF) by July this year. So far, only $250 commitment has been made by the World Bank towards the GFSF, with Ghana government assuring it would also make $500million commitment, which is even questionable. Despite that, the country would still need $750million in addition to be able to have the GFSF in operation by end of July this year.
A deterioration in the banking sector would further exacerbate the difficulties families and businesses are going through. The suffering would be unimaginable.
With eighteen months away from the next general election, we are expected to see expenditure overruns as already witnessed in Kumawu where a by-election is going to be held this week.
The first thing the Ghanaian public ought to do in helping solve the crisis is to stop the bleeding, by urging voters in Kumawu to reject the NPP’s candidate. This should be followed by a rejection at the polls in 2024. Anything short of that would be a catastrophe of biblical proportions. It would be more of the same wrong headed solutions to the country’s problems.
With our economy completely on its knees, the next government from 2025 would be in a very tight corner. The IMF’s own projections on page 35 of their report, shows that Ghana would still be in debt distress by 2027 with a debt-to-GDP of 86.1%. It is therefore imperative to court public understanding and take radical steps to address the challenges. President Mahama has already indicated he would appoint sixty Ministers and Deputies. That certainly would be a great start in 2025. In rebuilding our nation, we have a duty to urge government to cut down frills.
Former MP for Kumbungu