Bright Simmons write

 Bright Simmons write ✍️ 👇🏼👇🏼

1. Watchers of Ghana politics must have heard complaints from the NDC (lead opposition party/incoming govt) side of the ongoing transition of political power concerning tens of millions of dollars being paid out to a vendor of the state-owned electricity utility at this late hour.

2. The NDC claims to have blocked this payment for now.

3. The episode would make some think that the task of lessening the effect of the fiscal bomb awaiting the NDC when it takes office in January 2025 would involve a lot of cloak & dagger and undercover moves to retrieve stashed loot under beds and in foreign tax havens. 

4. Maybe there would be that. I don't know. Every incoming Ghanaian government makes these promises and then disappoints. What I know, without doubt, is that a lot of the fiscal trapdoors waiting for the new government are "hiding in plain sight".

5. Just one example: Agenda 111. The government used COVID-19 as a pretext to embark on a massive hospital and clinic building spree even though no budgetary provisions had been made for such in the medium-term expenditure framework. 

6. The Health Ministry was not directly involved in strategy, so there are no plans on how to stock these "111" large hospitals/clinics, staff them, or provide for their maintenance. Nor is it clear from which department's budget these costs will be serviced.

7. Everything was done in the Chief of Staff's office within the Presidency. Favoured contractors were handpicked and blessed with the juicy multi-billion dollar opportunity. Two in particular: famed Ghanaian architect, Adjaye, and luxury estate developer, Buena Vista. 

8. No one really knows how much the whole spread will cost. In 2021, $100 million was released to get things started and pay "mobilisation". Since then, reports say a further $300 million has been released to contractors.

9. None of the hospitals have been fully completed and certified as built to the requisite clinical standards. It is up to the next government to foot the bill. The pending liability has usually been estimated at $1.45 billion, and contractors are waiting for large disbursements to keep the work ongoing. Promises to complete by September this year were of course completely arbitrary and driven by nothing more than the electoral campaign calendar.

10. What is frightening is that the Ministry of Health has suddenly taken a look and now claims that about $7.5 billion is required. You heard that right. 250% more than the entire IMF package of $3bn, which required the painful DDEP to happen before Ghana could qualify. But even if it is the $2 billion some analysts assumed, it is still bigger than the energy sector arrears some fear might trigger a bigger round of dumsor. Yet, no one is talking about it.

11. Talking about the IMF, it is quite strange that whilst in a program that is supposed to constrain expenditure, the government was still allowed to spend this way. Bear in mind, also, that ~70% of the IMF money has already been disbursed to the current government. Apparently, for "good performance". Yet, most of the painful structural reforms have been left for the next government. 

12. All the above is why analysts believe that the new government on assuming office may revise macroeconomic numbers like the fiscal deficit and true debt position for, at least, 2024 following a detailed audit. Thereafter, they are likely to hound the IMF for a revision to multiple program targets and even an augmentation of the financing package itself.

Credit : Bright Simmons.