Towards An Immediate Solution To Avoiding IMF Program And Public Apathy: A Perspective

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Introduction

 

The world has, unfortunately, been going through quite challenging times lately. From COVID-19 pandemic (none of the sort seen since 1918 or some 104 years) that resulted in world lockdowns that affected most countries’ economies to the current Russia-Ukraine conflict (none of the sort seen since 1945 or some 77 years by some estimates). According to an IMF report published in April 2021, global public debt reached 100% of global GDP, up from 83.3% in 2019 and 96.4% in 2020 (“The 20 countries with the highest debt,” 2022). Among them, Angola 111%, Ireland 63%, UK 107%, US 133%, Uruguay 68%, and Portugal 131%, to name only a few (A complete list is available, “The State of World’s Government Debt,” 2022.)   

The Ghanaian economy has not been spared its fair share, of about 82%, and has particularly come into the spotlight, due largely because of the broader world outlook. They say ‘desperate times call for desperate or drastic measures.’ Some of the immediate drastic measures Ghana may need to take to support the present economic situation are:

 

  1. Cut the “profligate lifestyle” (“Don’t trivialize citizens reaction, 2022) down in order to court public sympathy and refrain from lose talks, such as “drink water if you cannot afford alcohol” (“Drink water instead, 2022) or “If the kitchen is too hot, 2013.) Those are called “arrogance comments,” and they offer the shortest route to opposition. Don’t forget that recipients of such comments may not take kindly to them, and may constitute a significant chunk of voters, irrespective of their habits and complaints. It’s best not to add insult to injury by showing tact or the ability to anticipate the likely impact of one’s comments and behaviors on others. They say in the Akan adage that translates literary as: ‘the lizard never got so furious at the one who shot the catapult at it than the commentator standing by who lauded the marksman.’
  2. Review the Free SHS policy to incorporate revenue generation from other sources, public and private, rather than exclusively depending on oil revenue. After all, this campaign promise has not met the best of times from the perspective of world events and should not be cast in stone. There was no bad intention about it. A formally literate population benefits a whole country, in the long-run, which should make it an alluring target for Corporate Social Responsibility. The Free SHS program will be likely to fall under the axe of any IMF program anyway.
  3. Strengthen domestic public financial accountability in particular, in the longer-term. We tend to show more commitment to international financial accountability, such as loans contracted with parliamentary approvals and oversight. But we don’t appear to do so well with similar accountability for domestic ones. 

 

A major bane of the economic development of Ghana may, after all, not exclusively boil down to excess borrowing or debt. It may be attributed to financial accountability, the offspring of corruption. According to The World Bank, Ghana does not really need an IMF program to assure a strong economic grounding that will speed up its economic development agenda. Although, an IMF program may be helpful, it only comes as a temporary measure to mitigate economic challenges, which had been made worse by the impact of the COVID-19 pandemic, and not helped by the Russia-Ukraine war. 

Engaging the media recently, Mr. Pierre Frank Laporte, the World Bank Country Director for Ghana noted that while the IMF stands ready to assist Ghana to re-negotiate some of its debts with creditors, guarantee more loans, and give the country an economic framework that would help shore up its reserves, even though debt to GDP ratio is now about 80%, “the country can go forward and do things without the IMF because what the IMF does is that it gives you a programme of reforms and gives you money that goes to help you in your reserves. It is “a mixed picture in Ghana, whereby your growth is okay, but your revenues are not strong, and your debt is very high. You can do it without the IMF, but the IMF can always give you something extra to do more” (Ghana News Agency, 2022.) 

 

The link between Raising Public Revenue and Accountability

It can readily be seen that Ghana’s condition is not so precarious as to warrant running to the IMF every now and then for a bailout. In fact, the country cannot continue to be running to the IMF every time for short-term measures just to shore up its reserves and expect to see any meaningful economic development in the long-term. We need to take the bull by the horn and step up to the plate to assure our collective dignity. We need to wean ourselves from the IMF programs, the mentality of living in the complacency that is aptly captured in the Akan sentiment that literary translates as: I won’t expend myself in any meaningful work because uncles’ inheritance will be waiting for me when he passes away. That is not a way to forge a meaningful and successful life, let alone a sovereign country. 

Our problem is not revenue generation either. Our problem is revenue accountability. When citizens see how a country’s revenue is being utilized truthfully for the public good, it serves as a great motivation to want to willingly contribute their widow’s mite. This is referred to as ‘tax morale.’ It is high when people perceive the positive use of their tax money, and vice versa when they perceive a negative use, such as lack of accountability and in some cases outright squandering of public funds. And perception, it has been said is reality itself. This means the phenomenon doesn’t have to be necessarily true to constitute or form a perception. This perception-truth differential is what propagandists utilize against opponents; create perception and expected outcome becomes real.

One researcher, Roel Dom (2019), observed that, there is a well-established connection that exists between taxation and accountability in the revolutions of the 17th and 18th centuries in the West. This connection is that when citizens are forced to pay taxes in any form, they are more likely to feel ownership of government revenues and demand benefits in return, while governments requiring revenue to prosecute its developmental agenda are more likely to make concessions to those taxpayers in order to encourage tax compliance. This process, referred to as tax bargaining, can result in more responsive and accountable governance (Pedley, & McCluskey, 2019.) 

Strengthening Revenue Collection and Accountability in the Public Sector

In order to improve revenue collection morale and compliance, revenue payers to public institutions, which includes taxpayers, the payer needs to understand the purpose of the money they pay, why they pay them, how the revenues are used or its accountability. With this awareness and information, they might be more motivated and better equipped to make demands on government. 

Given that Small and Medium Enterprises (SMEs) of entrepreneurs are the wheels of the economy that employ the bulk of workers in an economy, special provisions need to be made for them, especially at the inception of the business. We need to recognize and actually practice to the hilt the concept of tax holidays. Regulatory agencies may understand them, but hardly do they appear take them serious, as a necessary and important step that could maximize a country’s revenue and reduce unemployment ultimately. The general tendency of regulatory agencies is that once an entrepreneur starts up a business, that entrepreneur is perceived to be ‘rich’ and must be milked pale right from the outset.  But when too much financial outlays are forced on a startup business; when initial payroll bills, overhead costs, and infrastructural maintenance costs are confronting such entrepreneur, it spells a recipe for collapse and with it comes ultimate increase in unemployment rate in the country. 

Conclusion

Probably above all else, campaign promises are not cast in stone that should defy review based upon the reality on the ground. Besides, this is in no way suggestive of promising and failing a flagship campaign promise. Rather, government will only be reviewing it to expand sources of revenue to include the private sector so as to keep the program going, and if possible, make it conditionally free because there are some guardians who really don’t need it at all. They can afford the cost of SHS education for their wards unscathed financially. 

Also, there is nothing that spells more magic or inspires patriotism in the heart of the revenue payer than transparency. Any rational person cannot underestimate the high importance of public revenue in nation building. There may still be certain individuals, however few, who prize and countenance collective good over achieving their personal vision of power and ‘glory.’ Those people are keenly aware that without revenue, government services will grind to a total halt. Usually, the reluctance to willingly perform one’s civic duties comes from when people get the perception or impression of misapplication of public funds. That is the problem that must be solved, in order to release resources for the economic development of Ghana. 

References

“Drink water instead of alcohol if you can’t afford the increased prices”– dares Ghanaian distilleries boss Kofi Jumah.”  (2022). Retrieved on March 20, 2022, from,https://www.maravipost.com/drink-water-instead-of-alcohol-if-you-cant-afford-the-increased-prices-dares-ghanaian-distilleries-boss-kofi-jumah/

“Don’t trivialize citizens’ reaction to Ghana’s economic situation – Kwasi Prempeh” (2022). Retrieved on March 20, 2022, from,  https://www.ghanaweb.com/GhanaHomePage/business/Don-t-trivialize-citizens-reaction-to-Ghana-s-economic-situation-Kwasi-Prempeh-1487729

 

Ghana News Agency .(2022). “IMF not panacea to Ghana’s economic woes – World Bank, experts” Retrieved on March 14, 2022, from, https://www.ghanaweb.com/GhanaHomePage/business/IMF-not-panacea-to-Ghana-s-economic-woes-World-Bank-experts-1461808#:~:text=The%20World%20Bank%20and%20Economic%20and%20Finance%20experts,strong%20economic%20footing%20to%20accelerate%20its%20national%20development.)

 

“If the kitchen is too hot, leave the country – Nunoo Mensah tells labour” (2013). Retrieved on March 20, 2022, from, https://www.modernghana.com/news/497603/if-the-kitchen-is-too-hot-leave-the-country.html

 

Pedley, D. & McCluskey, R. (2019). “Tax and Accountability: How to strengthen the links?” Retrieved on March 14, 2022, from, https://www.ictd.ac/blog/tax-accountability-strengthen-links/)

 

“Review funding options for Free SHS – Dr. Manteaw” .(2022). Retrieved on March 20, 2022, from, https://thebftonline.com/2022/03/18/review-funding-options-for-free-shs-dr-manteaw/

 

“The 20 countries with the highest debt” .(2022). Retrieved on March 20, 2022, from, https://www.msn.com/en-us/money/markets/the-20-countries-with-the-highest-debt/ss-AAQd01r

 

“The state of World’s Government Debt (2022). Retrieved on March 20, 2022, from, https://howmuch.net/articles/state-of-the-worlds-government-debt-2021 

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