Economic Reset: Seriously and effectively fight corruption – Mahama told

The government, therefore, has to seriously and effectively fight corruption to curb its malignant effects on governance and development, the Institute of Financial Services (IFS) has said.

IFS explained that corruption has long wreaked havoc on the country’s development. It is pervasive and deep-rooted.

For instance, according to a corruption survey commissioned by the United Nations Office on Drugs and Crime, it found that in 2021, 17.4 million individual bribes, totaling an amount of GH?5 billion, were paid to Ghanaian public officials.

In addition to bribery, it said, corruption in the public sector is manifested in payroll fraud, rigged procurement, inflated and needless contracts, selloffs of public assets, and plain theft, among others.

“By these means, corruption leads to depletion of public resources, poor public services, and an unfavorable business climate, hindering economic growth and development. The government, therefore, has to seriously and effectively fight corruption to curb its malignant effects on governance and development,” the IFS said in a report.

Regarding the measures needed to tackle corruption, IFS called on President John Dramani Mahama to “Punish swiftly and severely those found to have engaged in corruption, irrespective of their party affiliation or status in society. This will enable the establishment of a credible deterrence against it.

“Review all public institutions with a view to identifying areas of operation that are corruption-prone for reforms. Run a merit-based, disciplined, well-supervised, and efficient public sector, with a focus on high performance to meet public needs and expectations. This is premised on the understanding that corruption thrives less where there is a competent and effective public administration, which constrains the openings for various types of corrupt acts.”

Regarding other matters, the Institute for Fiscal Studies has cautioned the government not to look for the least opportunity to return to the international bond market.

Rather than borrowing from the international market, the IFS told the government to learn from the central bank under the previous managers, when it sought non-debt-creating avenues to increase its international reserves, which is the Gold Purchase Programme.

Explaining the reasons for its caution to the government, IFS explained that since 2000, Ghana has suffered two debt crises.

The first, the HIPC crisis in 2001, was caused by an excessive build-up of external debt during the 1980s and 90s. Ultimately, it took debt forgiveness under the HIPC Initiative to save the country from a complete meltdown.

The second crisis, which emerged in 2022, resulted from build-up of both external and domestic debts after HIPC, which accelerated in the past decade. However, its trigger was external, because it was precipitated by, as stated earlier, a loss of access to the international bond market in early 2022 after the country’s credit ratings had been downgraded to junk status. Furthermore, during the recent debt restructuring to tackle the crisis, negotiations over external debt were more complex and protracted than those over domestic debt.

“So, while the nation must avert a return to excessive debt build-ups of any form at all costs, past experience shows it is especially imperative to avoid sliding back into another foreign debt entanglement,” IFS said in the report.

“The government should not therefore look for the least opportunity to return to the international bond market. To ensure this: The government should learn lessons from the past three years in which the country has carried on without borrowing from the international bond market.

“During this period, the government was compelled to pursue steps to ensure lower fiscal deficits. This stance should be maintained into the future, since low deficits imply low borrowing.

“Since the crisis moved the central bank to more vigorously seek non-debt-creating avenues to increase its international reserves (the Gold Purchase Program), this should teach the government a lesson that the nation’s natural resources can be leveraged for self-reliance.”

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