Fixing The Ailing National Economy Beef Up Finance Ministry – Kwesi Botchwey
A former Minister of Finance and Economic Planning, Dr Kwesi Botchwey, has advised that as part of the measures to build a strong national economy, the Ministry of Finance and Economic Planning should be beefed up with more competent hands to help in effective economic management.
In an interview with the Graphic Business, the longest serving finance minister spoke on a wide range of issues on the nation’s struggling economy.
According to the report, Dr. Botchwey stressed the need for the capacity of the Ministry of Finance to be beefed up.
“There are problems with capacity that need to be addressed and that have been noted down at the forum,” he said.
He added that those already there at the ministry were brilliant “but we do need more hands and also to shore up the capacity of the existing staff in the area of economic analysis”.
Similar advice was proffered by the Executive Director for Center for Policy Analysis (CEPA), Dr. Joe Abbey in an interview recently on Metro TV.
According to Dr Abbey, the Ministry of Finance is replete with accountants since the inception of the second term of the National Democratic Congress (NDC) and the appointment of the current minister, Mr. Seth Terkper in February 2013.
The finance minister himself is an accountant, his deputy an accountant, his chief director; an accountant, budget director, an accountant.
This preponderance of accountants at the ministry especially at the top has relegated economic thinking and planning and thus rendered economic management very difficult.
“He [Seth Terkper] stands the chance to be one of the best Finance Ministers we have ever had in this country given his own strong finance and tax credentials but what he needs is a strong team of Economists to deliver on his mandate,” Dr. Abbey stated.
He noted that statistics required interpretation “but we have an over –subscription to accounting and finance persons at the Ministry than I will find desirable – we need a stronger team of economists.”
Dr. Abbey thinks the Ministry has enough budget experts but there is the need for economists who would interpret the complex statistics and guide the ministry to generate enough revenue.
Under Seth Terkper, there have been numerous taxes that generated huge public outcry, including calls on President John Mahama to sack him for “incompetence”, and for “lazily imposing taxes instead of thinking outside the box to generate more revenue.
The recent blot on Seth Teekper’s credentials as Minister is the free fall of the Ghana cedi, which has driven drastic monetary measures by the Bank of Ghana, as Terkper’s fiscal environment has not been able to save the cedi.
The local currency, according to some experts has depreciated against the US Dollar by about 30 per cent this year alone and is likely to experience more depreciation before the end of the end unless drastic measures are put in place.
But the President passed a vote of confidence in Terkper saying that the Finance Minister is undertaking reforms that would break the cycle of ills in the economy and also fix certain fiscal weaknesses, so dismissing him was out of the question.
Ghana’s economy is currently undergoing one of its challenging periods with consistent deterioration in the macro-environment. Inflation has moved beyond the much touted single digit and is currently around 15 per cent, interest rates have been rising, the country has in the last two years experienced an unprecedented double digit fiscal and current account deficits and the national debt is moving to the unsustainable threshold.
However, former finance minister, Dr. KwesiBotchwey in an interview said the challenges facing the economy today are not as fatal as they are perceived.
“We are not going through a fatal crisis although there are echoes of that, but it is our responsibility to step back to ensure that we deal with the issues one after the other,” he told Graphic Business.
“Every economy has its ups and downs. Some of the problems have external causes and some are internal,” he admitted.
Highlighting the external causes, DrBotchwey, who happens to be the longest serving Finance and Economic Planning Minister, mentioned the tapering of the US Federal banks as one of the major reasons for the challenges facing the economy.
The Federal State is tapering its stimulative, quantitative easing policy. For instance, on December 18, the Fed decided to taper its bond purchases by $10 billion per month to $75 billion.
After three additional reductions, the programme currently stands at $45 billion per month. It is expected that the programme would wind down steadily through 2014 and conclude by year end, assuming the economy remains healthy.
Dr. Botchwey also mentioned the slowdown of prices of commodities such as gold and cocoa, the two major foreign income earners for the country, as one of the many external factors affecting the smooth running of the economy.
Dr. Botchwey said there was the need to recognize that there were internal challenges which had also placed the economy in its present form.
“There are domestic weaknesses which include the fiscal situation, expanded budget deficit, as well as expanded current account deficit,” he said.
The government, in spite of its measures to ensure fiscal consolidation, continues to borrow at high commercial rates.