An economist with the Institute for Fiscal Studies (IFS) Dr. Said Boakye, has said that the economic progress being touted by government, entails gains too inferior to claim credit for.
He indicated that government is neglecting a bigger economic picture which shows it is performing poorly.
Said Boakye’s analysis follows government’s confidence after it released a statement showing positives in the economy with a general election in November approaching.
In one indicator of progress, government has pointed out that per capita income, which is each Ghanaian’s share of the national income, now stands at US$1,340.
This, government says, is a 5.9% increase since the National Democratic Congress (NDC) took over the reins of government in 2009. The per capita income then was US$1,266.1.
But picking on this economic index, the IFS Senior Research Fellow pointed out that neighboring Ivory Coast has achieved in a year, what government has struggled to achieve in seven years.
Ivory Coast’s per capita income grew -0.6% during unstable times in 2011. But the once war-ravaged economy has grown its per capita income by 5.9% in just one year, 2015, the economist explained.
Said Boakye explained that the current government has only added 0.85% each year for the past seven years while Ivory is adding 1.18% each year since it emerged from war.
“You recognize that not much is being done, particularly in relations to the past three to four years”, he said.
According to him, Ghana has seen better days than the current economic record because in 2011, per capita income stood at 11.2%.
“This has declined to only 0.9% in 2015. It shows that marginally, not much is being added to what has been achieved”.
The problem with government’s understanding of the economy is that it is too fixated with marginal gains, Said Boakye noted.
Government is using the Stock Concept of economic analysis, which focuses on what has been achieved over a specific economic period in this case 2008 to 2016.
But the Flow Concept of economic analysis, he said, focuses on what government has added to the economy each year.
According to him, the use of the Flow Concept provides a much better picture of government’s performance, which he observed is worrying.
“If this trajectory that we are currently on, doesn’t significantly improve [then] in very few years, Ghanaians will begin to see much deterioration in our living standards,” he predicted.
Said Boakye explained that the budget deficit, which indicates that government has been spending more than it earns, is at the heart of Ghana’s economic woes.
From dizzy heights of 11.8% in 2012, it now stands at 7% in 2015 and government plans to cut this to 5.75% this year. This hole in the budget is holding back the progress of the economy, Said Boakye noted.
He said government’s programme agreed and supervised by the International Monetary Fund (IMF) to tackle the deficit is showing “good signs”.
But he feared that government’s election year habit of over-expenditure could kick in and derail all the efforts to improve the economy.
“If it [IMF programme] works, it will be better for all us, if it doesn’t work…you will be doing a very, very big damage to this country,” he said.
Ghana has bagged $233 million out of almost $1 billion in emergency loans earmarked for government by the IMF.
The goal of the IMF programme which is Ghana’s third since 1980, is aimed at bolstering the economy after a sharp slide in export revenue and rising debt, left government cash trapped.