By Sydney Casely-Hayford, sydney@ghananewsmonthly.com

Back when the NDC was in power between the “Provisional” and the “National” eras, you had this credibility problem with information dissemination and ministers speaking blatant untruths. It did not help because JJ Rawlings had supervised the newspaper licensing law and Totobi Quakyi had blatantly attempted to douse our intelligence by telling us that you could only have a limited number of radio frequencies and we could not have any more radio stations because those had been exhausted. Eight years on, we see the same pattern of lies and distortion of facts by the party and weak business media reporting is not helping the situation either.

Finance Minister Kwabena Dufuor says the economy is back on track 6 months after the NDC took over. When they came to power, they announced that the economy was in such a shambles it was impossible to determine how bad the situation was. No proof was provided. For those of us who follow the numbers, this is a grave insult. If it has been resolved so quickly, then it couldn’t have been that bad, or else it was not true and we will hear more of this later. Either way, it was plainly misleading at the beginning of the year, or just last week. Ablakwa Okudzeto is in the media this week saying the $300 million loan has no conditions attached. This is blatantly untrue. The key issues of the $535 million loan (read details http://www.ghananewsmonthly.com/viewnews.asp?id=3090&page=news) of which the $300 million is a derivative is as follows; the World Bank has committed to a $1.2 billion package for Ghana over the next 3 years.

An initial $150 million (half of the $300 million) with no strings attached because all the conditions have been previously fulfilled is to be released as soon as Government signs the agreement on July 15th, 2009. The next $150 million due to be released by October 2009 has 6 conditions attached, proposed by the NDC government itself. They include 1) taking measures to arrest the fiscal deficit once the public wage rate increase for 2009 has been established and correct any deviations with regard to pro-poor targeted expenditures, 2) passing a freedom of information bill through parliament, 3) appointing a minister of state in charge of public sector reform, eliminating ghost workers from the Ghana Education Service payroll and other MDAs, 4) completing and approving an electricity sector financial recovery plan, 5) completing draft legislation concerning the Ghana Petroleum Regulatory Authority and 6) revising the pro-poor public expenditures for use in the 2010 budget. This is all stated in the Economic Governance and Poverty Reduction Credit (EGPRC) paper issued by the World Bank on June 15, 2009. The remaining $225 million of the $535 million is allocated to the transport sector and $10 million is for Natural Resources and Environmental Governance Credit. Details of the balance of $1.2 billion another time.

Here is how the EGPRC document explains the country’s situation in 2008. “The new Government inherited a difficult macro-economic situation, the result of a series of shocks in 2008 which exacerbated a structural trend of widening fiscal imbalances. Rapid fiscal expansion in 2008 coincided with a sudden closure of access to international capital markets in September and as a result, the Ghanaian economy was hard hit by the combination of a widening current account deficit and a contracting capital account surplus”. (paragraph 9) Then in paragraph 13, it goes on to nail the real issue of the deficits. “The capital account received most of the shock-wave of the global financial crisis erupting in September 2008. Following the opening up of the domestic market in late 2006, non-residents were bringing in more than 2 percent of GDP (buying the new 3-5 years government bonds) annually. But by September 2008, inflows had collapsed and turned to outflows, as investors liquidated existing positions and repatriated their capital (leading to an estimated 2 percent of GDP shortfall with respect to expected inflows). In the event, the Bank of Ghana’s foreign currency reserves fell by more than US$600 million between August and December 2008 (against a US$800 million drop in the full calendar year 2008), the Ghana Cedi lost 16 percent against the US$, and Ghana’s sovereign spreads jumped from 470 bps to 1,570 bps”.

Clearly this capital flight was a result of the uncertainty surrounding the elections and all the heat from both parties threatening chaos and mayhem, blood in the streets and destruction in Ghana if they lost. This is a lesson for civil society for the next elections.

Despite all this the overall assessment of Ghana’s economic position is captured in paragraph 19 of the same document.

“Ghana’s financial sector is robust and expected to weather the global financial turmoil. Ghana’s banking sector remains sound, liquid and well capitalized, and barely dependent on foreign funding. As such, its exposure to the current global financial crisis is limited”.

To honestly state where Ghana stands with its credit and support from the World Bank, you need to fully understand the various assistance programs and how they have evolved. There is a Country Assistance Strategy (CAS - this has 3 pillars), the Ghana Poverty Reduction Strategy (GPRS) I and II, the Poverty Reduction Support Credits (PRSC) of which there are 7 different stages, the Millennium Development Goals (MDG), the Poverty Reduction and Growth Facility (PRGF), the Savannah Accelerated Development Authority (SADA) and these all go to support our vision of becoming a middle income economy with a per capita of $1,000 in 2010 when the oil revenues come on stream. There is more. Minister Dufuor’s and Deputy Minister Ablakwa’s media claims are simplifications and untruths derived from previous distortions, belittling the Ghanaian intelligentsia, simply because we do have access to the same information they do.

But these little and big lies can be curbed with some very simple steps. First is full disclosure. In supporting legislation for the Freedom of Information (FOI) bill, the World Bank has placed the most important condition on the remainder of the $150 million tranche of credit. Poor access to information in a timely manner has been used as a political gimmick in Ghana by every party and dictator. Transparency and accountability will provide us with a means by which we will be informed and be able to participate and pressurize government to deliver as promised.

The NDC government has to make a choice between forgoing the $150 million by not passing the FOI bill or going ahead with the obligations to ensure support from bi-lateral and multilateral donors. We are pending a visit by the president of the bastion of freedom of information and hopefully this will count for something. I can say one thing, the Ministry of Finance website is currently updated to April 2009. It used to be one year behind.