Home-grown policies bring Ghana back on growth path — Terkper
The Daily Graphic last Tuesday in an exclusive interview engaged the Minister of Finance, Mr Seth Emmanuel Terkper, on how the economy of Ghana is faring under his watch and sought explanations on the measures the government has been implementing to run the economy.
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Below is the conversation that ensued between the minister and our Staff Writer, Edmund Smith-Asante.
Daily Graphic: What has commodity prices got to do with the challenges of the Ghanaian economy at the moment and what is the government doing to solve these challenges?
Terkper: Of course we have the responsibility to explain. When gold prices fall, the town in Ghana which feels it instantly is Obuasi, because it is a mining town and they get the first layoffs. Therefore, if we are saying gold prices have stabilised it means that first of all, there wouldn’t be more layoffs.
Second, the recovery of the price means that those who were laid off are going to be re-engaged.
Role of the government
Daily Graphic: So what role is the government playing to ameliorate the hardships that people are going through?
Terkper: The role of the government is through special interventions such as the school feeding programme, free school uniforms and other programmes, particularly for the most vulnerable in the households such as the children who must go to school.
That is where the social interventions and other things kick in. Second, when we say that for two and half years there was a disruption in gas supply from Nigeria, what was the immediate effect?
From the Minister of Finance’ perspective, I see curtailment in power to industries and households but more to businesses and industries. Once you are in that curtailment, you face the Obuasi situation on a wider scale. That is one commodity affecting the enclaves – Ashanti Western where gold is produced. When it gets to power, it is more widespread and so the businessman is there to make profit so he limits the employment that he has to do.
That is the period of the pain and that is the period we are saying what difference does is it make to me because they are worse off. But in terms of employment, when we say we have worked and put emergency power in place ahead of even Sankofa, the permanent one, and we don’t experience that much “dumsor”, then it plays out that the person being recalled back to work is lining the pocket so you see the reverse of how it plays out.
Daily Graphic: For the ordinary man, what matters most is feeling the improvement in the economy in the pocket. Other than that, all the infrastructural developments do not matter. How are you making sure that happens?
Terkper:The notion that when the economy is down, people go into suffering - for them when you are talking, and we will be talking macro, but here I am talking about how that macro affects people down to the household level; that’s how gradually the restoration in the pockets happens.
The restoration in the pocket will not happen or cannot be sustained by the government giving out handouts. Over a long period, it cannot be sustained because business is not working simultaneously as tax revenues are going down.
If business is not working and you are laying off, where are they going to make the profit to pay the taxes? And so if you are thinking in terms of “in my pocket” handouts the government will go and borrow and we are all crying about the debt level and this is where for most governments or businesses, things are tough.
Sporadic gas supply
Daily Graphic: In that case, what steps is the government taking to make businesses thrive?
Terkper: The overnment must be solution-oriented and this is where our focus has been because you want to bring the economy back in a more sustainable way. Not in a handout kind of way so you look for investment, you look for World Bank guarantees so that at the end of the emergency you move into a solution phase, where Sankofa will come on stream and you make sure that the erratic power supply disruption is stopped.
So we are moving to a situation where we have identified for example the sporadic supply of gas to the economy. Luckily, we have been endowed with gas and if gas from Nigeria is not reliable, why don’t you move to bring your own gas?
And so a World Bank partial risk guarantee, yes, will be taking between $400 and $500 million of my scarce IGF resources which I probably would have given out as handouts, but I am saying a more sustainable solution is to get that guarantee and bring that investment to bring that gas on stream.
And so the foresight to support the private sector with those is yielding results. TEN Field is already adding about 25,000 or so barrels of crude oil per day. If we had been short-sighted and just given out largesse, we wouldn’t have TEN Field today.
And that is how some African countries did disinvestment and today they are in recession, whereas we have returned to the path of growth. There are a number of African countries from Nigeria to Angola to Zambia and others who are in worse pain.
We are now discussing to produce 500,000 barrels per day but the more sustainable solution such as we have in Tweneboa, Enyenra, Ntomme (TEN) Field is a concerted investment to create more jobs to enjoy stability, check crude oil exports, revenue from TEN and from next year pour crude oil.
When the big one comes – Sankofa, then you’re on to a more sustainable path, so at the time that we were going through the crisis, of course it was very difficult and you wouldn’t even have people from the media coming to talk about prospects because the problem was from subsidy to single spine, and it was all problems.
Home-grown measures
Daily Graphic: Can you share with us how we pulled ourselves out of those problems?
Terkper: We remained focused even though we were finding the solutions through the home-grown, if you look at the second part of the home-grown policy, we’ve had structural measures – how to contain them and how to make sure that we get the investments to bring Sankofa.
So we used to talk about the prospects for the economy. People were even deriding us when we were talking about the prospects of the economy, saying that yes we were going through problems and we said that be patient with us because we are finding solutions to the problems but not just solutions to the current problems.
Perhaps, for the first time, we are going to see a home-grown IMF programme that has consolidated in turning the economy (the turnaround) being backed by planning that we have done to lower debts, to bring massive investments in terms of oil and gas.
That is why the World Bank is saying Ghana’s growth is going to be seven to eight per cent, perhaps even nine per cent, in the next two to three years. So when we talk about money, we prefer the more sustainable path.
Contract data base
Daily Graphic: What other strategies has the government adopted to take the country out of the doldrums?
Terkper: The other strategy was to resolve the borrowing which was creating a lot of problems. We did what we call the contract data base. We decided to document every single contract because they all come through the Ministry of Finance for payment.
Ghana never knew how many contracts were in the system and that is one of the biggest headaches Ghana has always had - overshooting the budget. So when we did that data base, we realised that we had nearly about 3,000 or so projects here and there from education, health and others.
So we said if we can’t borrow, we don’t want to return the country to HIPC – complete the pipeline projects and even for the manifesto projects because you will need to check. It is better to do 120 or 100 projects and put checks on others and then continue as part of the aligned statutory fund, such as GETFund and others to back the education efforts.
So from the late President J. E. A. Mills’ time to the current President, we have put a moratorium on new contracts. So we started new programmes only on exceptional basis, focusing on pipeline projects.
