Economist and Professor of Finance at the University of Ghana Business School has stated that government’s promise to construct 94 new hospitals within a year is impossible. Godfred Alufar Bokpin explained that the reeling effect of Covid-19 on the economy will make this the materialization of this plan very difficult. “Are we in the position to absorb such a massive cost? Particularly from one sector, health? During the pandemic, we were living from hand to mouth and whatever we were collecting by way of tax revenue was essentially just wages and interest payments,” he told Daniel Dadzie on Joy FM’s Super Morning Show, Monday. Prof. Bokpin added that with the “international capital market practically on hold, this is going to be very difficult.” President Nana Akufo-Addo in his 8th national address to the nation on measure his government is taking to deal with the Covid-19 pandemic said 88 district and 6 regional hospitals would be constructed within a year.
But the Economics Prof advised government to take a measured approach to the execution of the policy even though it is very prudent to ensure that all districts in the country have a health facility. He stated that there would have to be a reduction of critical spending on other sectors of the economy to undertake this massive infrastructural development. “Perhaps we may have to do it maybe in phases. Are we going to load all of that onto the public debt stock this year? That is going to be challenging,” he said. According to him, putting up physical hospital buildings without the soft infrastructure and access by way of good roads will be a challenge. Prof. Bokpin also appealed to the Akufo-Addo government that existing uncompleted hospitals must be finished off to reduce spending in the face of the shock suffered by the economy.
He noted that it may take over three years to restore the economy to its ‘pre-pandemic’ state. “We are in a crisis moment and government and the usual discussion of debt to GDP ratio may not carry much economic value. Maybe thinking of taking advantage of that and ignore the usual fiscal discipline, financing arrangement,” the Professor said. The economist proposed that government may consider monetising the deficits by directing the central bank to print more currency to finance the cause.
Regarding the implications for private sector, Professor Godfred Bokpin warned that private businesses will have to ‘compete’ with government to access loans. “The government is much more credit-worthy in the local currency than any other business,” he admitted. “This implies that if government wants to borrow money it will affect the interest rate on loans. Thus making it more difficult for small businesses who need money to finance their ideas. “In order for quantity supply, those who want to make money available to increase that, the interest rate will have to go up. At both ends, it’s not that easy for all of us,” he clarified.