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It is “roughly accurate” for Dr Mahamudu Bawumia to say Ghana’s GDP has shrunk by 5% in USD terms under President John Dramani Mahama, policy think tank IMANI has said in its commentary on the recent economic lecture delivered by the vice presidential nominee of the main opposition New Patriotic Party (NPP).

According to IMANI, “World Bank data suggests a fall from $47.8 billion in 2013 to $37.9 billion in 2015. In real terms, this exceeds the 5%. Poor petroleum sector performance is only partially to blame. The non-oil economy has been under considerable stress too.”

On Dr Bawumia’s claim that Ghana’s GDP per capita roughly quadrupled under the NPP but has grown by less than 20% under the NDC taking all money value factors into account, IMANI said: “This is generally accurate. Ghana has seen a significant fall in GDP per capita growth since 2013, from 4.77% to 1.52%.”

It, however, caveated that statement saying “it is important to note that there is an aspect of this trend that cuts across sub-Saharan Africa. Between 2000 and 2008, average per capita income across the region rose from $505 to $1140. Between 2008 and end 2015, however, the growth has been comparatively lower, from $1140 to $1630. Between 2013 and end-2015, it actually fell but not at the same steep rate as Ghana’s.”

Below are the rest of IMANI’s comments on some aspects of Dr Bawumia’s lecture which the policy think tank believes he used data in a “fair” manner to interpret data to criticise government’s running of the country:

3. Claim: There has been a revenue shortfall of about GHS 700 million for the first half of the year.

Comment: Dr. Bawumia appears to be using the budget estimate of GHS11 billion as the benchmark. By that yardstick, he is completely accurate. But he could also have done a cross-year comparison against the 2015 figures and come up with an even higher shortfall of more than GHS 2 billion.

4. Claim: A raft of bad taxes has been slapped on goods such as bicycles and ambulances that do not deserve these taxes.

Comment: It is indeed true that bicycles now attract a 42% composite tariff when in the past only a 0.5% levy applied. Two issues need to be looked at critically: was this development as a result of a deliberate policy to protect local bicycle assemblers or to harmonise with the ECOWAS Common External Tariff (and does the NPP object to such policies in principle)? Generally open trade benefits almost everyone, but it is important to know whether the NPP will reverse the underlying policies that may have caused this hike or not.

8. Claim: Ghana’s debt to GDP ratio declined from 189% in 2000 to 32% in 2008. Ghana's total debt has now ballooned from GHS 9.5 billion in 2008 to GHS 105 billion today. The Finance Minister’s claim that the public debt to GDP ratio has declined to 63% debt to GDP ratio is plain wrong because had he used the debt stock at the end of Q1 2016 and divided it by the GDP result realised in Q1 2016 he would have obtained 71% in current 2016 dollars.

Comment: Most of the figures are about right if one sticks to current USD as we pointed out in the first section of this article. Ghana’s public debt did decline from a high of 187% of GDP to 26.2% of GDP in 2006 and then rose to about 32% of GDP in 2008. Since then it has risen, according to IMF calculations, to circa 70.5% of GDP.

Caveat: Whist Dr. Bawumia’s calculations are quite sound, the formula he proposes, which involves dividing the debt stock as at Q1 of 2016 with the GDP realised over the same period is baffling. If he meant that the Minister should have annualised the Q1 2016 GDP result rather than use the budget projection, then that is simply a question of methodology. As for the Minister’s claim that the Debt-to-GDP ratio has declined in percentage terms from 72% to 63%, he presents no data to back this computation whichcontroverts the debt sustainability analysis his own Ministry has been conducting with the IMF.

9. Claim: Infrastructure expenditure as a percentage of GDP declined sharply over the period between 2008 and 2015. Interest payments are now higher than capital expenditure. Public Investment into infrastructure is on the decline in Ghana, with capital expenditure as a percentage of GDP having come down from 11% to 5.7% on average. The money being spent on servicing our debt today is greater than the amount being spent on some six important ministries.

Comment: This is broadly accurate. The figures are best interpreted through the lens of tax revenues rather than broad GDP however since GDP growth has been quite significant (more than 40% over the same period). Capital expenditure (which captures investments in hard infrastructure) as a percentage of tax revenue did indeed fall from 36.39% in 2008 to 11.82% in 2013. Government is clearly spending more on consumption than on investment. In a similar vein, interest payments as a percentage of total revenue was 15.3% in 2005, down from 42.3% in 2000. The GDP analysis shows a current interest payments to GDP ratio of 6.5% compared to 2.8% in 2008.

10. Claim: Cedi depreciation under the NDC has been much higher than under the NPP.

Comment: Completely accurate.

11. Claim: The use of single-sourcing and non-transparent procurement processes for even, large, capital-intensive, complex, projects has led to billions of dollars being wasted, sometimes in shady deals that suggest corrupt motives on the part of some parties.

Comment: This point cannot be faulted. The $300 million loss anticipated over the lifetime of the scandalous Ameri deal, in respect of which the President has promised an audit by the PwC, is a clear example of this unfortunate trend.

12. Claim: Credit to the private sector has dropped considerably over the past year, while the debt stock of state owned enterprises continue to rise worryingly.

Comment: An important point.