NDC JOB CUTS IN 2017

Posted on: www.dailyguideghana.com

By William Yaw Owusu

Friday, April 23, 2015

It has emerged that the National Democratic Congress (NDC) government agreed to cut public sector jobs in their latest dealings with the International Monetary Fund (IMF) which has brought about $918 million bail-out cash.

As part of the stringent conditionalities attached to the bail-out, the John Mahama-led NDC government begged the Breton Wood institution to shift the arrangement to 2017 because of the political implications especially in an election year and the fund appeared to have agreed.

Senchi Consensus

The government prior to the deal had organized a National Economic Forum in June, last year and came out with what was termed as ‘Senchi Consensus’ which they called a homegrown solution and later presented for the bail-out.

Interestingly, the opposition NPP had boycotted the forum and said it was not going to be used as a bait to get them to endorse the harsh conditionalities attached to IMF loan including job cuts.

Bawumia Prediction

Prior to Senchi, Dr. Mahamudu Bawumia, who is NPP’s Nana Addo Dankwa Akufo-Addo running-mate for the 2016 election predicted massive job cuts but the government conveniently claimed it was going to the IMF to solicit its support in implementing what they claimed to be “home-grown’ policies to heal the ailing economy and vehemently denied the bail-out bit.

The renowned economist cum banker had again said recently that the Mahama government was only baiting Ghanaians to retain them in office in December 2016 in order to embark on the massive job cuts in early 2017.

"My understanding is that government wants the IMF agreement to delay the worker layoffs until after the 2016 election. I wonder why? I suppose the message is ‘vote for me before I fire you’,” he said in a 70-page presentation at Central University College, at Miotso in March.

‘Right-Sizing Exercise’

At page 17 of a document titled "Request for a three-year arrangement under the extended credit facility" posted on the IMF website on April 21, the government had pledged to bring reform to the Civil Service by forming a task force to make  recommendations to the government as part of the “right-sizing exercise.”

“The government aims at bringing the wage bill-to-revenue ratio down from 53 percent in 2014 to 35 percent over the medium term, in line with the regional ECOWAS target,” the document said adding “this will require wage restraint over the full three year program period, with increases consistent with expected disinflation.”

“The authorities will design a civil service reform strategy during 2015 with the assistance of development partners, which will aim at increasing the productivity and rationalizing the size of the civil service. As part of this reform, the government intends also to review the role of subvented agencies.”

Also, the report gives details of Ghana's programme with the IMF, including the conditions that the country is expected to meet before further disbursements are made.  

The report said that Ghana should get its next disbursement of $144 million by July 15, another one in November if government meets certain conditions. Even though the program will end in 2017, the last tranche will be advanced to Ghana in March 2018.

Bail-out background

The Executive Board of the International Monetary Fund (IMF) in early April approved a three-year arrangement under the Extended Credit Facility (ECF) for Ghana in an amount equivalent to SDR 664.20 million (180 percent of quota or about US$918 million) in support of Ghana’s medium-term economic reform programme.

According to the IMF, the programme aims to “restore debt sustainability and macroeconomic stability to foster a return to high growth and job creation, while protecting social spending. The Executive Board’s decision will enable an immediate disbursement of SDR 83.025 million (about US$114.8 million).”

The government’s three-year economic reform programme seeks to support growth and help reduce poverty by restoring macroeconomic stability through an ambitious and sustained fiscal consolidation, a prudent debt management strategy with improved fiscal transparency, and an effective monetary policy framework.

The programme foresees a pick-up in economic growth, starting in 2016, supported by expected increases in hydrocarbon production, lower inflation and interest rates, combined with a stable exchange rate environment would help support private sector activity.