Treasury’s quick fixes won’t revive economy
That the country’s economy is between a rock and a hard place is a poorly kept secret— and matters are not helped by seeming panicky National Treasury mandarins, who are lurching from one quick fix to another to redress the problem.
With an increasingly worrying debt portfolio, dwindling tax revenues, massive youth unemployment, job layoffs and stagnating productivity, especially in agriculture, the economic squeeze is real, not just for the government, but also for the ordinary citizen.
Understandably, the austerity measures recently rolled out by Treasury Cabinet Secretary Ukur Yatani are proving too bitter a pill to swallow for many government officials who for eons have been hooked onto a spendthrift mentality and pilfering of public resources. The usual culprits are the political elite, who have conveniently insulated themselves from the pain of their electorate.
In the obtaining scenario, the only viable option is an economic stimulus package to kick-start the economy. But again, where are the resources in an economy stifled by over-taxation, retrenchments and shutdowns?
A solution— and an urgent one —must be found. This is why to keep running, the government is now scrounging for resources from State agencies, which have been ordered to surrender cash reserves, Treasury Bonds and A-in-A revenues to the Treasury.
While the move seems strategic on checking spending, aligning all payments through the Exchequer and making cash available for circulation in the economy, it is likely to have the opposite effect: ruin the velocity of cash flow for these State corporations and in effect, tamper with their operations and service delivery, making it even more difficult for them to render services.
It must be noted that since the onset of devolution, Treasury has been making unpredictable Exchequer releases and to box corporations, which have had their own resources, may lead to even tougher times for suppliers.
What’s more, with debt redemptions accounting for more than half of government expenditure, ongoing austerity measures have also led to a sharp dip in liquidity.
It is unfortunate that policy makers and economic planners seems to be trapped in the make-believe relief of digging a hole to fill another.