Economic hardship high in country-Dr Kwakye

There is a widespread feeling that economic hardship is high in the country since the restoration of macroeconomics stability has not trickled down to people’s pockets, Dr John Kwakye, Director of Research at the Institute of Economic Affairs (IEA) has said. 

He said in the State of the Nation Address (SONA) though the President painted a good picture of national issues, realities on the grounds most often depicts otherwise, adding that though macroeconomic stability in general was good for both businesses and households, the benefits normally take time to be felt.

Dr Kwakye made the observation during a media briefing in Accra yesterday to share views on the SONA with the public with regards to realities on the grounds.

The media briefing covered wide range of statement on economy, agriculture, energy, job creation among others. 

The researcher said though the government inherited depressed and destabilised economy, in the last three years, it has returned the economy to growth and stability in the face of high hardship in the country propelled by other economic factors.

He said some of the factors which contributed to the economic hardship were the financial crisis which led to retrenchments, pay cuts and delayed payments of customers’ funds coupled with the fiscal policy which has constrained government spending. 

“Thus economic hardship is being experienced in spite of improved macroeconomics indicators,” he said. 

On the financial sector with regards to the crisis, he said the banking sector has shown marked improvement after the cleanup exercise despite the fact that the issue could have been handled differently to maintain indigenous ownership presence as well as save the colossal sum from the taxpayer’s kitty to pay off depositors. 

Dr Kwakye advised that in the future, there need to be a protection scheme or an insurance policy to safeguard customers’ deposits and reduce budgetary cost in case of a bank failure. 

He said the Free Senior High School programme which has been touted as a success came with its attendant problems such as inadequate facilities as well as huge budget which would be difficult to sustain considering other pressing needs required to be funded by the budget. 

“It has been suggested that the policy could have been implemented differently to reduce cost and safeguard quality,” he said. 

In terms of infrastructure development, he said the cost of the Free SHS programme coupled with the budget expenditure which has been hijacked by personal emoluments, interest payments and statutory funds have created large deficit in road infrastructure development in the country. 

Dr Kwakye said since the government revenue was being consumed by social intervention programmes and other expenditures, the situation left virtually nothing for capital and other spending, which have to be financed by borrowing.

He said it was no gain saying that the government has spent a lot on social intervention programmes, however since roads were more visible than human capital, the deficit has generated widespread discontent compelling the government to do something urgently this year to shore up its political fortunes by declaring “year of roads”.

Dr Kwakye said though the President said agriculture has improved under his administration, however, local food prices were still high and beyond the means of many Ghanaians adding that the fact that food accounts for 43 per cent of the average Ghanaian’s monthly spendings was enough evidence that food prices were still prohibitively high. 

“In a way, we still have a long way to go in producing more food locally to reduce food prices and the general cost of living, “he said. 

BY LAWRENCE MARKWEI 

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