Over the past couple of months, the incumbent government has come under attack from its critics – both political and economic – for wrongly reporting some aspects of the country’s economic performance data (see pages 12 & 13) prior to the unsettling effects of the COVID 19 pandemic. This has been brought to the public’s attention by the International Monetary Fund, which has published parallel data which shines bright lights on debt owed in the energy sector and debt incurred for financial sector reforms, that government had relegated to foot notes and off-balance sheet items in its own reporting to Parliament.
But while this newspaper agrees that this has led to, for example, under reporting of the fiscal deficit, we also hold the view that this has been done primarily for the benefit of Ghanaian’s, rather than as an effort to deceive them, as the critics would have them believe. Simply put, government has tried to hide away some of its debt through (dubious) classification as contingent, rather than actual liabilities, in order to create more space for new borrowing and at cheaper cost too.
This, for instance, has enabled Ghana to issue Eurobonds and secure other forms of commercial debt financing more cheaply than would otherwise have been the case, and over longer tenors too. But at the same time, concessionary lenders such as Ghana’s bilateral and multilateral development partners have supported the country based on its real situation rather than its accounting sleight of hand – which is why, for example, the IMF gave us more than we originally asked for under its Rapid Credit Facility for fending off the adverse effects of the coronavirus out- break.
To be sure we acknowledge that Ghanaians deserve to be given the real picture of the national economic predicament by the government they elected to manage it on their behalf. But in government’s defence, Ghanaians have been told half-truths rather than outright lies; for instance the case can be made that bonds issued by a special purpose vehicle leveraging its own balance sheet translate into corporate, rather than public debt. In truth though that argument cannot stand up for much, when that special purpose vehicle is entirely owned by government whose guarantees are underpinning those bond issuances.
Nevertheless, we believe government should be cut some slack at home; after all seemingly lower debt translates into better financing terms which are good for Ghanaians not bad. Even though some dishonesty is involved it is primarily for the benefit of the citizenry whose economic fortunes are in part tied to the level of public indebtedness and the terms of that public debt.
Actually though, this newspaper is not particularly surprised by the way Ghana’s economic data has panned out prior to the coronavirus outbreak. Even rudimentary economics shows that fiscal; consolidation and supply side economic policy are not comfortable bed fellows and it was wishful thinking from the start to believe they could co-exist..
Indeed, the efficacy of supply side economic policy needs to be measured by the degree of increase in economic output, not the degree of change in level of input, as measured by public expenditure. In that regard, the incumbent government can point to faster Gross Domestic Product growth since it adopted expansionary economics.
While we are not saying that this fully justifies the sometimes dubious accounting adopted by government we are saying that if we are willing to accept the good in the form of faster economic growth, we should be willing to accept the cost too.