Ahead of Graphic Business/Stanbic Bank Breakfast Meeting: Use ruthless approach to stabilise economy — Former IMF advisor
AN international economic consultant, Dr Emmanuel Kumah, has called for a “ruthless approach” to expenditure cuts to help create breathing space for public finances and set in motion a credible process to economic recovery.
The former Resident Representative of the International Monetary Fund (IMF) said the spending cuts must be immediate and targeted at reducing the size of government to create a lean, mean and efficient body that reflects the austerity that the economic challenges have imposed.
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Dr Kumah told the Graphic Business on November 7, that the expenditure cuts through a reduced size of government and the rationalisation of the flagship programmes would be one of his three top priority recommendations on how the country could recover from its present economic state.
He said the other two would be to quickly revamp revenue collections through the rationalisation of existing tax handles, as well as urgent appeals to the country’s bilateral creditors for concessionary loans to plug the deficit.
“If we should do two things, then it will be to take a comb and go through the structure of government and try to consolidate, limit, reduce or collapse Ministries, Departments and Agencies (MDAs), their allowances and do everything that I can to make sure that it does not grow again.
“Then, we can look at the revenue side and see how to efficiently collect more,” he said.
Breakfast meeting
The former IMF resident representative in Djibouti shared his views with the paper on how to address the current challenges ahead of the Graphic Business/Stanbic Bank breakfast meeting tomorrow, November 9.
To be held on the theme: ‘17 Times too many! What should we stop doing and start doing as a people?’, the pre-budget event is the fourth in the year aimed at soliciting the views of the public on policies and programmes needed to stabilise the economy.
It will feature a panel discussion on the current challenges, recommendations on resolving them and how to ensure that the economy does not derail after the completion of the IMF programme being negotiated.
It will take place at the plush Labadi Beach Hotel in Accra for a limited number of invited guests.
Prior action
Dr Kumah said the challenges facing the economy were the result of excessive spending of borrowed funds and efforts to cut expenditure must be prioritised.
“We are at a point where something has to give, but what is that?
“My experience is that it is always better to look at the fundamentals first. For us, the structure of our government has grown very big and we need to downsize it as soon as possible,” he said.
“It needs to be a prior action and a major part of our reform,” he said, noting that the reforms must also ensure that the size did not grow afterwards.
Job losses
The former IMF advisor said the current size of the government, which boasted of almost 500 MDAs, was too bulgy and contributed to the excessive spending that led to the current crisis.
Consequently, he said one credible way to deal with the crisis was to either consolidate or collapse some of the MDAs to help reduce the financial burden they imposed on the public purse.
He also mentioned allowances and other side benefits of government appointees and key national officers as expenditure items that must be rationalised immediately for a lean and an efficient wage bill.
While admitting that cutting the size of government was tough, Dr Kumah said the current circumstances made it inevitable and the earlier the country did that, the better.
“Obviously, there is concern about employment and I agree, but there are things that you can do in the short term without immediately creating unemployment.
“You can try to consolidate the structures, the seat of government and redeploy people. If we are able to do that within a year, we will see progress, then we can start with the reductions,” he said.
He was convinced that the issue of downsizing would feature highly under any IMF programme to stabilise the economy.