IMF bailout: Bawumia’s blame-shifting ‘comical, ridiculous’ – Mahama

Former President John Mahama has observed that Ghana’s economic hardship “persists and is set to remain for an extended period”, noting: “Amid this gloomy outlook, those responsible for the mess refuse to exhibit contrition and sobriety”.

“One of the key architects of the failed policies and mismanagement that have led to our economic downfall and suffering, found it necessary a couple of days ago, to put up a public display that verged on the ridiculous and comical”, Mr Mahama said when he addressed the minority caucus at a workshop in the Volta Region on Sunday, 17 July 2022.

“In a government where honour and responsibility are respected, the Chair of the Economic Management Team that has thrust us into this crisis would have stepped down or dismissed”, he noted.

“In fact”, he said, “the very idea that this government has requested for an IMF programme would have been sufficient reason for him to go, in view of all the unenlightened propaganda he dabbled in against our IMF programme of 2015”.

Rather, he noted, Dr Bawumia “has chosen to show a gaping deficit in leadership attributes by making untenable excuses and seeking to shift blame onto the government that left power almost six years ago and which had no role to play in the poor policy choices that have delivered these disastrous outcomes”.

Speaking at the launch of two new high-level information technology programmes at the Accra Business School on, Thursday, 14 July 2022, Dr Bawumia blamed the Mahama administration, partly, for the Akufo-Addo government’s resort to the IMF for a bailout.

“In fact”, the Vice-President noted, “As I stated in my April 7th lecture, in addition to COVID-19, there were two major items of expenditure that are critical to understanding the evolution of the fiscal deficit and the debt stock: the Banking Sector Clean up (GHC 25 billion) and the Energy Sector Excess Capacity payments (GHC 17 billion)”.

The excess capacity payments of GHC 17 billion, he explained, “relate to a legacy of take-or-pay contracts that saddled our economy with annual excess capacity charges of close to $1 billion”.

“These were, basically, contracts to supply energy to Ghana way in excess of our requirements, but we were obligated to pay for the power whether we use it or not”, Dr Bawumia noted.

The excess capacity payments, he pointed out, “include GHC 7 billion of payments for gas resulting from the previous government signing an offtake agreement for a fixed quantity of gas with ENI Sankofa on a take or pay basis which was way in excess of what was needed at the time. Not keeping up with the excess capacity payments would have meant throwing the country back into a new bout of dumsor”.

Additionally, he said: “We were also confronted with a banking crisis as a result of the mismanagement of the banking sector. Ghana’s banking system was on the verge of collapse and not dealing decisively with it would have meant disaster for the economy with millions of people losing their savings”.

Also, he said, “direct COVID-19 expenditure amounted to GHC 12.0 billion, made up of GHC8.1 billion in 2020 and GHC 3.9billion in 2021”.

The data, Dr Bawumia explained, “shows that the three items of expenditure cumulatively amounted to GHC 54.0 billion (the equivalent of some $7.0 billion), which was borrowed. The Ministry of Finance estimates that the interest payment on this borrowing for the three items amounts to GHC 8.5 billion annually”.

“This is some 23% of Ghana’s annual interest payments of GHC 37 billion. To put the expenditure on these three items in perspective, it is important to juxtapose it against the total expenditure (releases) on some of the government’s key flagship projects, including Free SHS, one district one factory, planting for food and jobs, Development Authorities, Ghanacard, Zongo Development Fund, NABCO, and teacher and nursing trainee allowances”.

“The data shows that the expenditure on these key flagship programmes over the five-year period between 2017 and 2021 amounted to GHC15.62 billion compared to the GHC 54.0 billion expenditure on the three exceptional items”, the Vice-President computed, stressing: “The expenditure on the three exceptional items amounted to more than three times the expenditure on the flagship programmes over five years”.

“In fact, the annual interest cost of borrowing the GHC54.0 billion for the three exceptional items would pay for double the annual cost of all the flagship programmes referred to”.

“It should be noted that without the GHC 54.0 billion debt for the three exceptional items (COVID-19, Financial Sector and Energy), Ghana’s debt to GDP would be within the sustainability threshold of some 68% instead of the 76.6% at the end of 2021”, he added.

However, Mr Mahama, in his response to Dr Bawumia’s assertions, said: “The often-cited GHS 25 billion used in the so-called financial sector clean-up was self-inflicted and the result of reckless, politically motivated decision-making”.

“I would stress that the problems the banks and financial institutions had, could have been resolved with a third of that amount and we would have recovered same in good time if this government was minded doing the right thing”.

“The Akufo-Addo and Bawumia government took the unwise decision to collapse those financial institutions and is liable for any outcome. The claims about excess capacity payment are no truer than the other three excuses. The monies paid to the IPPs, which is deceptively couched as payment for “excess capacity” are in fact subsidies paid for power that has been generated and supplied to consumers. We had done sufficient work before our exit in 2016, to address the financial bottlenecks in the energy sector”, the 2020 flag bearer of the biggest opposition party noted.

One of the outcomes of this work, Mr Mahama added, “is ESLA, which to date has given this government about GHS 23 billion. This should be enough to substantially ease the financial problems of the sector. The now legendary mismanagement of this government has, however, ensured, that despite collecting all this money, IPPs are currently owed over $ 800 million equivalent to about GHS 6 billion”.

In his view, “No amount of buck-passing can wipe away the irrefutable fact that our present economic situation stems from reckless election-related expenditure, mismanagement, ineptitude, and lack of proper leadership”.

“The highest form of irresponsibility is to shift responsibility to others and irresponsible leaders are simply not worth the mandate of the people”, Mr Mahama asserted, adding: “We require serious and focused leadership to reverse the trajectory of the economic collapse we have been set on by this government. I would also repeat my call on President Akufo-Addo to take control of the situation and inject fresh, reflective, and dynamic thinking into the management of the economy”.

He said: “It is evident now more than ever, that those who superintended this disaster do not even realise the cause or gravity of the problem and cannot be relied upon to find any credible remedy. We in the NDC continue to do our part by holding this government to account and offering viable alternative paths”.

“Where the NPP saw political advantage and an opportunity for political rent-seeking in 2015 when we went to the IMF, we see a nation in distress that requires urgent salvation in 2022 when we have gone back to the IMF. That is why we have been measured and responsible in our commentary and posturing over the latest IMF decision by this government”.

“It is also the reason why we have insisted on effective scrutiny of the economic and financial decisions of this government at this time, especially in Parliament. We do not believe that the existence of crisis permits even more reckless decision-making. All decisions and policy choices made at this critical juncture could offer relief or exacerbate our problems and make recovery extremely difficult”.

Read Mr Mahama’s full speech below:

My brother the Minority Leader, Haruna Iddrisu,

Leadership of the Minority Caucus,

Members of the Caucus,

Ladies and gentlemen.

It is a real pleasure to join you at the end of what I believe has been a very useful workshop to sharpen your skills and boost your repertoire of knowledge as Parliamentarians.

Though many, including my good self, have gone through this path you find yourselves as MPs, the composition of the 8th Parliament under the Fourth Republic, places you at the centre of history. It has also brought in its wake, a unique responsibility and burden of expectation never witnessed.

The people of Ghana, in their own wisdom, have decided to produce a hung Parliament in which none of the two major parties who have dominated the house in the recent past, have a clear advantage.

As the Rt. Hon. Speaker ruled at the inception of this Parliament, there is no Majority or Minority side. What we rather have is a Majority group and a Minority group.

We in the National Democratic Congress (NDC) maintain that, but for the abuse and misuse of security goons with the connivance of the Electoral Commission to overturn the true outcome of the 2020 elections, we would have secured a clear majority in Parliament. This unprecedented Parliamentary outlook reflects years of criticism and demands by our people for a strong and assertive legislative arm of government that is truly independent of the excessively powerful Executive.

It also reflects a desire for greater scrutiny of the Executive and more efficient exercise of your oversight functions, especially for those of you in the Minority group. From the very first day, therefore, your work was cut out for you. On the evidence of what we have seen so far, you have done what is within your power to shield Ghanaians against some draconian and very poor policy proposals of the Akufo-Addo government.

You have stood firmly and pushed back against blatant abuse of Parliamentary rules and standing orders.

Deploying unorthodox methods on some occasions, you have held a marauding government, that has viewed itself as invincible and that treats Ghanaians with contempt, at bay and prevented them, as far as possible, from ramming very unpopular policies down the throats of our people.

As you have done this, the Akufo-Addo administration has intensified its efforts to whittle down your numbers. It has not shied away from using bizarre judicial processes to achieve this objective. A case in point is how our MP for Assin South remains an MP yet is barred from performing his functions in Parliament. This has unjustifiably and inexplicably denied the people of Assin South, representation in Parliament at a time when other constituencies where legal disputes have arisen over the Parliamentary elections of 2020 have their MPs discharging their duties until the determination of the substantive matters brought against them.

They have also sought to use malicious prosecutions against some of you as a way of intimidating you into silence and docility. These tactics have not diminished your resolve and you continue to remain resolute. That said, a lot is still expected from you as a Minority group in Parliament. Given the way state agencies including some arms of government pander to the will of the Akufo-Addo administration and are prepared to undermine the rules and long-established principles to do their bidding, you remain perhaps the last true bulwark between the longsuffering people of this country and total misrule.

You have become the immediate hope of a people who labour under irresponsible governance and abuse of office. There is the need therefore to meet this expectation by injecting further impetus into your work by keeping an even keener eye on the activities of the Executive.

The scrutiny that you are required to do on behalf of the people who elected you also extends to all state institutions. The framers of the 1992 constitution intended that a number of these institutions complement the efforts of the Legislature at ensuring good governance.

The style of this administration has been to subjugate and dominate these institutions for parochial and partisan gain. These institutions have thus become pliant tools for the furtherance of the political ends of the New Patriotic Party (NPP) and President Akufo-Addo.

One such institution is the Electoral Commission, which, instead of making it easy for our citizens to take part in elections, rather takes delight in making it difficult. They appear determined to ensure the disenfranchisement of sections of our population at all costs through a misguided insistence on the use of the Ghana card as the only source of identification for a voter card. How do you do this, knowing that the Ghana Card is not available to everyone who should have one?

The Ghana Card is a relatively new feature of our national life and has its merits in the scheme of things. At the moment, it is being brandished more as a political tool around which all manner of schemes is being fashioned toward elections. There is the need to allow sufficient time for its full integration into our way of life before this kind of unhelpful exclusion of all other legitimately acquired, credible and time-tested forms of identification is implemented.

The National Identification Authority cannot claim to have covered every Ghanaian who should be registered or distributed all the cards printed to those who have been captured in their system. They have failed to distribute hundreds of thousands of cards to people who have registered. Until full and total coverage is achieved in the rollout of the Ghana Card, room must be made for those who are yet to be served, to exercise their democratic rights of voting. They cannot be excluded from the voter register due to no fault of theirs.

This should be clear and quite easy to appreciate. The haste on the part of the Electoral Commission to exclude all other means of identification is, therefore, clearly indecent and informed by an ulterior objective. Last week, you in the Minority raised red flags over suspected attempts to compile a new register on the sole basis of the Ghana Card.

The Electoral Commission has been quick to deny that it harbours any such intentions. Until the advent of the current leadership of the Commission, this denial would have marked the end of the matter. The Commission, in its present guise, is known to have walked back on similar commitments in the recent past and, so, we, in the NDC, will maintain eternal vigilance to ensure that no such thing happens.

The process of continuous registration as canvassed by the Electoral Commission must necessarily include a system that enables all political parties and relevant stakeholders to possess the capacity to monitor same in real-time, to avoid fraud and exploitation to the undue advantage of any party. We in the NDC will insist on this.

This workshop is being held at a time of great suffering in our land due to unparalleled economic mismanagement by the Akufo-Addo and Bawumia government. After a lengthy period of living in denial and plunging the economy into unprecedented doldrums, the government finally decided a few weeks ago to request for an IMF programme.

They left the decision so late that substantial damage had been done to the economy by the time the call was finally made. Inflation stands at a 19-year high of almost 30% for June and is almost set to rise. Our deficit and revenue targets have so far been badly missed and we are most likely to post yet another double-digit deficit at the end of this financial year.

Our public debt has continued to mount. Indications from the recent data collection exercise of the IMF team that visited Ghana last week are that government has up to GHS 40 billion in arrears and contingent liabilities in addition to the official public debt of about GHS 400 billion. On the back of this, it is believed that our debt to GDP ratio runs into the 90% region.

Our ability to meet our debt service obligations remains tenuous with Ghana ranked as the country with the second highest likelihood of debt default in the world after El Salvador. It is no secret that our foreign currency reserve position is extremely precarious. This leaves us vulnerable unless there is an urgent injection of additional foreign exchange inflows.

The economic hardships persist and is set to remain for an extended period. Amid this gloomy outlook, those responsible for the mess refuse to exhibit contrition and sobriety. One of the key architects of the failed policies and mismanagement that have led to our economic downfall and suffering, found it necessary a couple of days ago, to put up a public display that verged on the ridiculous and comical. In a government where honour and responsibility are respected, the Chair of the Economic Management Team that has thrust us into this crisis would have stepped down or dismissed.

In fact, the very idea that this government has requested for an IMF programme would have been sufficient reason for him to go, in view of all the unenlightened propaganda he dabbled in against our IMF programme of 2015.

Rather, he has chosen to show a gaping deficit in leadership attributes by making untenable excuses and seeking to shift blame onto the government that left power almost six years ago and which had no role to play in the poor policy choices that have delivered these disastrous outcomes.

I have recently dispelled, based on facts and figures, the false attributions made for our economic problems, but it bears repeating that none of the tall list of excuses he made for where we are is acceptable. All our neighbours were also affected by COVID-19 and exist in the same world in which the Russian- Ukrainian conflict is raging.

Almost none of them have anywhere near 30% inflation, or double-digit deficits or the kind of debt we have or a debt to GDP ratio around 90%. None of them has a higher risk of debt default than we do.

The often-cited GHS 25 billion used in the so-called financial sector clean-up was self-inflicted and the result of reckless, politically motivated decision-making.

I would stress that the problems the banks and financial institutions had, could have been resolved with a third of that amount and we would have recovered same in good time if this government was minded doing the right thing.

The Akufo-Addo and Bawumia government took the unwise decision to collapse those financial institutions and is liable for any outcome. The claims about excess capacity payment are no truer than the other three excuses. The monies paid to the IPPs, which is deceptively couched as payment for “excess capacity” are in fact subsidies paid for power that has been generated and supplied to consumers. We had done sufficient work before our exit in 2016, to address the financial bottlenecks in the energy sector.

One of the outcomes of this work is ESLA, which to date has given this government about GHS 23 billion. This should be enough to substantially ease the financial problems of the sector. The now legendary mismanagement of this government has however ensured, that despite collecting all this money, IPPs are currently owed over $ 800 million equivalent to about GHS 6 billion. No amount of buck-passing can wipe away the irrefutable fact that our present economic situation stems from reckless election-related expenditure, mismanagement, ineptitude, and lack of proper leadership.

The highest form of irresponsibility is to shift responsibility to others and irresponsible leaders are simply not worth the mandate of the people. We require serious and focused leadership to reverse the trajectory of the economic collapse we have been set on by this government. I would also repeat my call on President Akufo-Addo to take control of the situation and inject fresh, reflective, and dynamic thinking into the management of the economy.

It is evident now more than ever, that those who superintended this disaster do not even realise the cause or gravity of the problem and cannot be relied upon to find any credible remedy. We in the NDC continue to do our part by holding this government to account and offering viable alternative paths.

Where the NPP saw political advantage and an opportunity for political rent-seeking in 2015 when we went to the IMF, we see a nation in distress that requires urgent salvation in 2022 when we have gone back to the IMF. That is why we have been measured and responsible in our commentary and posturing over the latest IMF decision by this government.

It is also the reason why we have insisted on effective scrutiny of the economic and financial decisions of this government at this time, especially in Parliament. We do not believe that the existence of crisis permits even more reckless decision-making. All decisions and policy choices made at this critical juncture could offer relief or exacerbate our problems and make recovery extremely difficult.

We are in a massive hole, and we do not need further digging. This informed my announcement that the NDC and the Minority in Parliament would not be supporting the ultra-expensive $1 billion syndicated loan agreement brought to Parliament by the finance minister. Our position on the $250 million component remains unchanged as such unfavourable terms as the $40 million insurance payment and total interest of over $ 80 million make it too expensive and inimical to the economic interest of Ghana.

It is also not programmed in the 2022 budget statement. Until the terms are renegotiated to make them favourable and same captured in subsequent budgets, we are unable to support the approval of this $250 million component. On the $ 750 million component, which was programmed in the 2022 budget, we note that since I stated our position a fortnight ago, some effort has gone into renegotiating the costs and terms, which now appear more favourable than when it was originally presented.

Clarity is, however, yet to be brought on the exact purpose of the loan. Beyond a sweeping claim of using it to finance some activities in a few sectors, no breakdown of growth-related sector projects has been provided. I wish to state that in addition to the new and improved terms, the NDC will only support the approval of this component if evidence of its use for specific growth-related projects leading to improvements in the lives of our people is presented.

It is my belief that this workshop has sharpened your skills, which have already come in handy in the fight to protect the interest of the people of Ghana and keep this government in check. If we are to navigate these turbulent and extremely difficult periods in our history, we will need an effective and vibrant legislature.

As Minority MPs, the bulk of that task rests on your shoulders and you would have to redouble your efforts to keep pace with the demands and expectations of our people. It is history and providence that have placed you in this most unique position of being representatives of the people in a hung Parliament.

It is the sort of situation our people have yearned for, for quite some time and you must grasp the full weight of that expectation. It is my belief that the bright note on which you have started will continue and we will see more from you by way of quality representation of the people and greater scrutiny of an executive which has tendered to govern badly and abuse the mandate of the people.

I thank you for your kind attention.