Despite its majoritarian appeal, democratic principles and practices have the intended goal of equalizing opportunities for all in a world that is not so equal. Apart from rewarding special interests, there are larger societal interests that an elected government vows to serve sometimes to the detriment of that society itself.
Oil is a resource, whose price, many countries cannot influence once the oil producing countries put a ceiling. Yet, because it has a ripple effect on general goods and services, it quickly becomes a political issue. In very weak African economies, it is not difficult to determine who carries the burden of such price transfers. Many democratic governments on the continent fear their constituencies ‘revolting’ against price hikes so they prefer to absorb increases and offer subsidies. World oil prices have reached US$52 a barrel. Ghana goes to the polls in December and so far the government has spent over a fifth of its projected US$1billion income from export earnings in fuel subsidies for the domestic consumer.
Interestingly, Central Bank and government economic planners say the country has enough cash reserves to cushion domestic consumers against increases in world oil prices for four months. Allowing the price hikes to filter through the economy means a costly inflationary spiral the government is not ready to entertain especially as the electioneering process itself will be churning out huge government expenditures in satisfying temporary voter’s wish list, much of it bread and butter. So the game is to sacrifice economic reality on the altar of the so-called "political and social stability" and defer the nemesis until after elections.
Already the nation confronts a huge foreign and domestic debt with government having to borrow from already ‘famished’ social security contributions to balance some outstanding salary payments. One would have thought that as a candidate of the Highly Indebted Poor Country initiative, paths that dwarf our attempts to come out of the debt conundrum would be avoided.
I had also thought that a truly buoying economy as we have been made to believe currently subsisted, was one that should reflect in the pockets of the various individuals that played diverse roles in growing it. For, if these reserves were truly owned by Ghanaians and ultimately was to trickle down into their pockets, they were better placed to react to fuel prices increases with no worse impact on the outcome of the elections than a mandate for the government that created the enabling atmosphere in the first place. At least the process of petroleum deregulation envisaged to take off in February 2005 should not be hampered by uneconomic subsidies however expensive. Sometimes good intentions have unintended consequences.
Oct 25, 2004
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