A former Minister of Finance and Economic Planning, Dr Kwesi Botchwey, has stated that the challenges facing the economy today are not as fatal as they are perceived.
His view of the economic situation in the country contradicts what other experts see as a worsening economic situation which require urgent and pragmatic steps to fix before the country goes bankrupt.
â€œWe 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,â€ he told Graphic Business in an interview shortly after the close of the National Economic Forum at Senchi in the Eastern Region on May 15, 2014.
â€œEvery economy has its ups and downs. Some of the problems have external causes and some are internal,â€ he admitted.
Highlighting the external causes, Dr Botchwey, 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.
Tapering according to Investopedia is the gradual winding down of central bank activities used to improve the conditions for economic growth.
Tapering activities is primarily aimed at interest rates and investor expectations of what those rates will be in the future.
These can include conventional central bank activities, such as adjusting the discount rate or reserve requirements, or more unconventional ones, such as quantitative easing (QE).
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.
According to the former Finance Minister, Ghana is not the only country which has been badly hit by the Federal tapering decision; many other developing economies around the world have also been hit.
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.
Ghana, since independence, has been heavily reliant on cocoa and gold proceeds and has, thus, always remained vulnerable to shocks whenever the prices of those two commodities slump on the international market.
Although managers of the economy are aware of the situation and its impact on the economy, they continue to pay lip service to efforts to diversify the export sector to take advantage of growing demand for horticulture and other non-traditional crops such as mangoes and pineapple, among others to make up for the shortfalls of the two major commodities.
Again, Ghana is very noted for exporting its key commodities in their raw form. Foreign companies are allowed in to exploit the countryâ€™s gold, export it in its raw state, process it outside the country and sell it back to Ghanaians at a higher price.
The situation is the same with cocoa as the beans are exported in their raw state to foreign countries to be processed in huge factories that provide employment for their people at Ghanaâ€™s expense.
Dr Botchwey said there was the need to recognise that there were internal challenges which had also placed the economy in its present form.
â€œThere are domestic weaknesses which include the fiscal situation, expanded budget deficit, as well as expanded current account deficit,â€ he said.
The government, in spite of its measures to ensure fiscal consolidation, continues to borrow at high commercial rates.
This leaves many analysts wondering, as they indicate that much as it is good to borrow, there is the need to ensure that sectors where the borrowed funds are invested return what can be used to defray the loans.
However, this is not the case in many instances, a situation which gets many Ghanaians wondering what the monies borrowed are being used for.
Dr Botchwey also stressed the need for the capacity of the Ministry of Finance to be beefed up.
â€œThere are problems with capacity that need to be addressed and that have been noted down at the forum,â€ he said.
He added that those already there at the ministry were brilliant â€œbut we do need more hands and also to shore up the capacity of the existing staff in the area of economic analysisâ€.
All hands on deck
Dr Botchwey said the business of economic transformation could not be done in a year.
â€œWe have demonstrated to the world that we have challenges and we are committed to solving them because there are short and medium to long-term measures which require time to implement,â€ he said.
Dr Botchwey was strongly of the view that the 22-point communique, christened the â€˜Senchi Consensusâ€™, would serve as a guide for the government to implement the various recommendations.
â€œWith the political will and a greater support from all to ensure the implementation of the consensus, the country can realise its aspirations,â€ he said.
Dr Botchwey called on sceptics not to be cynical with their criticism of the consensus but contribute their quota to help with its implementation.
â€œLetâ€™s not be cynical; letâ€™s have hope; we all have a responsibility to ensure the smooth implementation of the recommendations,â€ he advised.