February 6, 1984

Donor Nations Conference on Ghana

Talking Drums has got tape recordings of the recent donor nations meeting on Ghana held in Paris on November 23rd-24th last year. As can be expected and is usual in these matters, the releases issued at the end of the meeting did not reveal much of what actually took place. Of particular interest are the answers given by members of the Ghana delegation to questions posed by the donor nations. Apart from their curiosity value, these answers shed a lot of light on the inner thinking and future plans of the self-proclaimed people's government of the Provisional National Defence Council. Below we publish some excerpts from the answers given by Kwesi Botchway, the Finance and Economic Planning Secretary and leader of Ghana's delegation.

"I will take a few of the questions and concerns that have been expressed and Dr Abbey will deal with others and I do hope that on one at least, World Bank staff will assist.

Let me take the easier one first, Mr Chairman.

I believe that the representatives of the donor countries that are in Accra, will admit that over the past year we have been in fairly regular consulta- tions with them, we have tried not to cover up or hide anything, we have been extremely frank in our discussions of our problems with them and we like to maintain this tradition, because we believe that it is in our mutual interest to do so.

On the question of the general political climate in the country and the question of human rights in relation to the technical assistance problems which have been raised we are grateful that the matter has been raised and that some suggestion has been made. We will certainly take this into account. We have already, I am glad to say, made substantial progress on that front and in the sense that we have already set up a machinery to review the cases of all those Ghanaian nationals outside who wish to return to assist in the development of their own country, but for some reason are unwilling to do so now.

That a committee has been set up in the highest level to review these and in fact some of these nationals have already started coming to the country to have their cases reviewed.

In fact, as at now there are hardly any persons detained that you would call political detainees as such.

I must say for the benefit of those who don't know the whole background to the problem, that many of the pro- fessionals who fled the country in the wake of the change of the government, did so in order to avoid investigation into their conduct in relation to already existing laws.

A committee was set up to investigate compliance to tax obligations, for instance. I think we made some reference in our presentation to the fact that as the economy deteriorated and as price distortions became uncontrollable, the revenue situation in the country got particularly precarious because past governments were unwilling to tax the increasingly lucrative business that flourished in the informal sector of the economy, although the tax laws existing in the country at the time required that this be done.

I do know that in many of the countries represented here today, these tax regulations are taken extremely seriously, and we have been trying to emulate the example of many of your countries, and to ensure that if tax laws are not satisfactory we change them. But as long as we are happy that they are correct then they should be enforced without any discrimination any fear or favour.

So, many of these professionals fled the country really because of laws to disgorge moneys which they have accumulated, again in contravention of these laws. However, following consultations and discussions with some of our friends we tried to relax operations of these rules and to ensure that some of these persons would be attracted back into the country with assurances of safe conduct. And I think this is a step in the right direction, and I am happy to say that some of them have already started returning.

Now, to get back to Mr Russell's question.

I agree entirely that it is no use just talking about rehabilitation without maintenance. In fact, as I am sure Mr Russell himself is aware, this is one of the key things that we discussed with Commissioner Pisani when he was last in Accra. And we do have a vehicle and plant rehabilitation maintenance outfit already in the country which has been doing its best in the circumstances.

But it does need inputs which have not been forthcoming because of past foreign exchange constraints, and with the help of the EEC we are hoping that we can expand the work of this committee, both by providing further technical assistance, if need be, and also by providing the necessary mater ial inputs that will make their work have the desired impact.

POLICY

Mr Russell also talked of what he perceived as a switch in our policy from large scale state farms to re revival of peasant production. We want to improve the efficiency of peasant production.

You ask what institutional arrangements will be made to support the new emphasis, particularly in the area of marketing, what role will the new state structure play etc?

Now, in our new way of thinking we would like more and more to involve the private sector and cooperatives in the operations, particularly in the aves of marketing, but these cooperatives have to be in place and that they function well before we assign them with any real additional responsibilities.

We have what we call farmers service centres that have shops. They have marketing facilities that I suppose operate on more or less a cooperative basis. It hasn't been easy to really mobilise the farmers to form these co-operatives. This is one area that again we hope, when the EEC agricultural experts that we discussed with Mr Pisani, do come to Accra we hope that this would be one aspect of the whole problem of agricultural production which we can look at in greater detail. It is something that needs to be investigated very closely. When you look at the history of cooperative efforts in all countries, virtually all countries, I think that the lesson we draw from it is that it is of no use coercing people to form them. So it's a matter of finding a proper balance between some degree of volution and some degree of proper urging on the part of the state.

BALANCE

We are not sure that we find this balance yet and we welcome any views and advice from those of our distinguished delegates here who either have the expertise themselves or can tell us perhaps how we can acquire it. So as soon as these institutions have really crystallised and as they do so we propose to shed the burden of state in- volvement in the whole area of marketing and cooperatives. It is extremely burdensome financially on the budget. When they want to purchase grains, whatever, they come to the budget and we haven't been particularly generous with them even as we try to put the co- operative in place. So we do want to involve cooperatives in particular, but we want to be sure that they are efficient; if they don't operate efficiently I suspect that they, probably, very quickly turn into state enterprises and come back to the budget for budgetary support. Yes, counterpart funds will continue to be used to support local food production efforts as we have done in the past.

On the question of technical assistance, whether there would be any political problems that would stand in the way, no, I don't see any real political problems.

First of all I would like to say that this is something that we are going to discuss in detail tomorrow. It is in Item three. We have had lengthy discussions with the Bank and with the UNDP and I would be happy tomorrow to give you the full general outline of the direction of our thinking.

But I can say at this stage that I don't see any political problem as such. What we want to do of course is to make sure that given the real costs of foreign and technical expertise, we concentrate on strengthening our own local train- ing capabilities even as we seek technical expertise in areas where we obviously do not have them and where it will take too long to train or retrain our own people.

Mr Johnson also, if I may disclose what we discussed privately, Mr Johnson, tagged on a second leg of his question, which he communicated to me during our recess and that is: will technical assistance be welcomed in areas that we consider sensitive like the Central Bank or the Ministry of Finance where obviously experts working at these areas would have access to information that we would consider confidential.

My reaction immediately is we do publish much of the information that the Central Bank sends out. In fact, them. very often I suspect that the Fund and the Bank do get this information even before we have published them. There is not that much that is confidential there.

EXPERTISE

Of course, I believe that every nation does try in these key areas to have his own people. As we quote Randeshell, if we decide that any of these 'sensitive' areas require technical expertise which is not immediately available, then of course I don't see that we have any problem getting people from outside provided that they are willing to work in accordance with the rules of these establishments.

We have in the past had people working in our Central Bank in the Ministry of Finance from outside, and it has not posed any problem in the past. I don't see that it will pose any problems in the future. As I said, obviously in such areas, we would like to ensure that our own people, our own potential is exhausted in the first in- stance.

I would like to just now address some aspects of the question that Mr Hoffman posed. Well, if I may just briefly comment on the analogy which we have before us in place of the old which we had this morning, I dare say that we are not really looking at a new baby. I don't think, if it is a baby, I would say perhaps it used to be a baby, and suddenly it was of age, it was ailing and I think it's been. It started recuperating sort of, and we want to make sure that this being recuperates fully and starts walking. I think that it was a baby maybe 25 years ago as I am sure Mr Hoffman will agree and we all want to make sure that through this collective effort this new born being begins to behave like an adult and walks vigorously.

But to get back to the substance of what Mr Hoffman had in mind, of some of the aspects of the question that he raised: Yes, it is true that no one can really say with any degree of certainty how the economy will react in the course of the three year period.

We can make projections based on certain assumptions, and it is then our responsibility to ensure that these assumptions materialise to the extent that this lies within our power.

Some local manufacturers have expressed some worries about the impact of such a large devaluation on domestic prices. If they become too high, they are worried that they might be saddled with unsold stocks and we have been discussing this matter with We believe that the fear at this stage at any rate, is exaggerated, we believe that they have been a little spoilt in the past because as the shortages persisted we had a sellers market, and in fact sometimes the stocks were bought before they were manufactured, and some people just made profit overnight.

They began to share profits of distributors with them and I think it would be a good thing if we began to see commodities and products sitting on the shelves for a while and I think it is a normal thing in most places that if cigarettes are produced it should sit there for a while. People will buy what they need instead of just buying too much of it and selling it on the foreign market.

Our manufacturers have been used to this kind of thing in the past, and I think that their worry is not so much that the prices will get so high that they cannot sell anything, but that the profits; the extra profit from participating in illegal trading would be curtailed. And I think that far from there being any real cause for concern it should be a heartening development if stocks sit there for a reasonable length of time, as I think happens in an economy that is operating normally.

But of course, you do have a point. Obviously, it can reach a point of diminishing returns and when we get there I am sure that given our commitment to flexibility, and with appropriate consultations with the Fund we will be able to find the real answers to them. But we have established a system of regular dialogue with the manufacturers and this will help us to determine when we are really getting there instead of just worrying about the problems which they have at this stage which I don't think are real.