World Bank/IMF policies have consistently increased the number of unemployed, expanded poverty, and decreased productivity and self sufficiency in Ghana as in most countries. Once again Ghana is caught in that vicious cycle.
An article on Ghana web gives a clue as to what Ghana is up against with loans from the World Bank and IMF, and shows it got into these problems by following the prescriptions of the World Bank and IMF. As an earlier article pointed out. Ghana has been an economic and political success story, but:
… last year world food and oil prices soared. China’s slashed demand for raw materials is harming much of Africa. Global warming caused a drought that drained the dam powering Ghana’s electricity, requiring crippling oil imports. The last government borrowed to cover these unexpected costs, the currency dropped in value, inflation rose to 20% and credit has dried up.
Economists at the NGO Oxfam point out that this was not caused by profligacy, but by external events last year. A further source of bitterness: if rich countries had kept their 2005 Gleneagles promises, as Britain did, Ghana would have received $1bn, with no need to borrow at all.
Every government knows what it has to do to get credit, so Ghana has already said it will lower its deficit from 15% to 9.5% of GDP in one year, steeply cutting public sector costs … an IMF thumbs-down means money from everywhere is cut off.
And so Ghana needed a loan, and is trapped in the vicious cycle:
…Public sector labour freeze costs Gov’t 1billion dollars
Ghana’s, dependence on donor-fundings, and their attendant conditionalities, for the implementation of her fiscal policy year in and out, is beginning to take a heavy toll on the country.
News about the recent International Monetary Fund (IMF)’s $1billion total financial facility to Ghana for her budgetary support, as approved by its board on July 15, 2009 came just a day after the Attorney General, Hon. Betty Mould Iddrissu had disclosed that Government of Ghana (GOG) owes as much as over $1 billion dollars in judgment debts which have accumulated over the past 10 years.
She explained that the problem boils down to the fact that, the attorney general’s department lacks the human resource capacity to function adequately as government’s legal advisor in all transactions government enters into.
According to her, “Ghana lacks the capacity to retain attorneys for all Ministries, Departments and Agencies (MDAs), so out of frustration, the MDAs hire private legal practitioners to guide them in some of their transactions, some of which bring about legal problems.
“The department also lacks the requisite manpower to send attorneys to court to defend the state whenever those litigations come up”, she disclosed, adding, “it is a systemic and an endemic problem with the department which has been there over the years”
For this reason, government is now saddled with such a huge debt including those to CP Construction, Attachment Awards against the government in France, Britain Belgium, USA and Holland.
It has been suggested that the genesis of the problem of the lack of human resources in the public sector dates back to the late 1980s and 1990s when government was instructed to freeze public sector recruitments in return for World Bank/IMF supported Economic Recovery Programmes.
This same condition, of freezing public sector employments, is said to have been reaffirmed by the Breton Woods institutions in the current loan agreements, but Finance Minister explains it is government’s own decision to manage public funds prudently.
However another contradictory condition is also the call on government to establish a Public Sector Reform Ministry as a requirement for further assistance from the World Bank. Opinions are divided as to where manpower would be secured to run such a new ministry if recruitments into the public sector is to remain frozen.
Although Finance Minister, Dr. Dufuor has told this reporter that the AG’s department has been given the clearance to recruit 20 new attorneys, Financial Intelligence (FI) investigations have revealed that the problem of inadequate manpower is not peculiar to the Attorney General’s Department, but a general problem that has bedeviled the whole of the Civil Service in Ghana.
Departments such as the Veterinary Department, Extension Services of the Ministry of Agriculture and other government departments have been crying over the years for more personnel to be recruited to beef-up their activities.
For the Crop Extension Services and Veterinery Services, although their training schools in Kwadaso, Nyankpala, Ohawu, and Pong-Tamale have been churning out well-trained personnel over the years, due to World Bank conditions that were introduced as a result of the Economic Recovery Programme and The Structural Adjustment Programmes, employments of these personnel have remained frozen till date, leaving the departments with the only other option of replacing retiring and diseased staffs.
The Cocoa Services Division is on record to have attracted a large number of extension officers from the Agric Ministry, while engaging many others who had either completed the Agric Training Institutions as well as some Sixth Form leavers from the early 1990s, and current gains being made in that sector is believed to be as a result of those investments earlier made in human resources.
Questions are being raised as to whether it is prudent to continue freezing recruitments into the public sector, when evidence has started emerging that it can be costly in the long run as evidenced by happenings at the AGs department.
If the MDAs can find money to hire the services of private legal practitioners whose legal advice in transactions have proven to be costly to the nation, it would have been better if the state spent money employing full time attorneys for the AG’s department, for onward attachment to the MDAs.
A senior Lecturer at the University of Ghana Business School, Kwame Gyasi … “it is the public sector which moves the private sector and not the vice-versa, then; there is a problem if you freeze employment in the public sector down here”.
“Now that the private sector is collapsing, freezing employments in the public sector would not only end up in some costly financial consequences for the state as has happened in the judgment debts, but will also create upheavals”
Neoliberal free market practices have brought disaster on the western governments of the northern hemisphere. But the World Bank and the IMF continue to impose those policies on the developing countries when they issue loans.
As one impassioned comment on the article said (all caps are frequently used in the comments):
IMF AND WORLD BANK SUCCESS STORIES SOON TURN INTO MIRAGES EVERYWHERE. I CHALLENGE ANY IMF, WORLD BANK OR GHANAIAN OFFICIAL TO CITE ONE SIMPLE EXAMPLE OF REAL SUCCESS.
THE IMF IS THE ACRONYM FOR “I MOSTLY FAIL”, “INTERNATIONAL MONSTER WITHOUT FEELINGS”, “INTERNATIONAL MISMANAGER OF FINANCES”
THE WORLD BANK (WD) STANDS FOR “WORST BANDIT”, “WORLD DESTROYER”, “WORST DEATH”.
THEY REJOICE WHEN THEY SEE AFRICANS MARGINALIZED AND IMPOVERISHED. THAT IS WHY THEY PRESCRIBE STRUCTURAL ADJUSTMENT FOR AFRICANS WHILE THEY EMBRACE RESCUE PACKAGES.
Ghana does not have the personnel to oversee and regulate contracts because those staff were laid off and reduced, due to previous World Bank/IMF requirements to lay off and reduce staff. Without those public sector legal advisors providing advice and oversight, Ghana incurred expensive judgements.
At a time when the economy is contracting and losing private sector jobs, it is a huge mistake to also reduce public sector jobs. In fact, public sector jobs help create private sector jobs, particularly in health and education, which often suffer the most under World Bank/IMF requirements and structural adjustments. A healthy workforce is productive, the more healthy, the more productive. And an educated workforce brings business and employers looking for a large available pool of smart, healthy, and well educated people to work for them. A strong public education system, including universities, attracts and creates strong private sector growth.
But as the earlier article: What Wall Street did to Ghana said:
Oxfam’s senior policy adviser and economist, Max Lawson, doubts such cuts are needed, just a loan to tide Ghana over. “The IMF is too brutal … demanding balanced books within one or two years. The only way to make such a deep cut is in social spending: teachers’ salaries are the main item.”
In the West governments are undertaking huge fiscal stimulus programs to repair their economies. But in the developing world those same governments and institutions continue to advocate reductions, restructuring and belt tightening. It looks like the plan is not to help but to prevent developing nations from developing.
Note: graphic above from here