Vice President Bawumia mentioned “the triple whammy” as factors that have contributed to the difficulties the Ghanaian economy has been experiencing recently during a recent economics lecture in Accra.
The COVID-19 pandemic and Russia’s invasion of Ukraine, as well as the massive clean-up payments made in the financial sector and the staggering Ghc 17 billion payment made in the energy sector debt left to the Akufo-Addo administration by the former Mahama regime—which experts say negotiated questionable take-or-pay deals—were the causes of the quadruple whammy, according to the Vice President.
Following Dr. Bawumia’s “quadruple whammy” speech, the IMF confirmed the Vice President’s assertion by adamantly stating that the twin global crises of the avian influenza virus pandemic and the Russia-Ukraine war have in fact had a negative impact on the decline of the Ghanaian economy over the past two years.
The World Bank has added its voice, which is yet another victory for Vice President Bawumia, by claiming that the over GH17 billion that the Akufo-Addo government has paid as cost of excess energy capacity charges—otherwise known as energy the country doesn’t need—that the Mahama Government signed for has contributed to suffocating the economy.
The World Bank Country Director highlighted the enormous losses in the energy industry as well as COVID-19 issues as factors escalating Ghana’s economic troubles in an interview with television station TV3 on the country’s economy.
“The financial side has been the main problem. Prior to the current crisis, we noticed some difficulties on the financial side, which has actually been the area most severely affected. Additionally, where responding to them now calls for action. For instance, we have always argued that Ghana could perform better on the revenue front. The fact that the World Bank should consider supporting this as one of its prospective program areas gives us hope.
Fiscal issues, not revenue, are the issue.
“The issue is that there are also spillover effects from other industries, including the energy industry. Because of losses, the oil sector is receiving around $1 billion. You must subsidize the industry since it is not profitable on its own.
“Actions must be taken. Naturally, COVID-19 has made the overall business environment a little more challenging.
Action is necessary, he continued, and Ghana will probably get approximately $600 million in balance of payment support for the upcoming budget.
“How much are we looking at if Ghana is able to achieve all the requirements and receives the financial help from the World Bank?
“Normally, there is a hard rule and soft rule, we can give around 30 to 40 percent of the country’s budget support and for Ghana, we are looking around $600million. Ghana’s envelope for the next three years is $1.5billion,” he added.
Ghana has experienced a stable electricity supply since the current administration took office in 2017. This is a marked improvement over the nearly five years of energy crisis experienced by Ghana under the previous administration from 2012 to 2017, which was a result of that administration’s inability to make financial commitments to Independent Power Producers.
However, experts claim that the more recent stability is due to the current administration’s consistent financial support of these power plants.
The previous administration agreed to an inevitable annual payment of over US$1 billion for power the country doesn’t need, which has been choking the stability and depleting government coffers.