As Greece Struggles to Remain in the Eurozone, What Lessons Can Ghana Take

Sunday through into Monday morning, Euro zone officials sat down for seventeen (17 hours), to demand measures necessary for Greece's request for over 96,billion bailout; mind you, this is after two bailouts already, totaling 266billion. On Monday, an agreement had been reached for a third bailout. Albeit with some heavy conditions!


Others floated around the possibilities of Greece's exit from the union; in fact, Greece itself played with this idea up to a point. Many in the Zone, including private persons I engaged with, seemed to be exasperated at Greece and actually would prefer it. Even though Germany says it was never an option, this was used as a threat and as a French minister put it 'In the end, it is Europe that won' through out the negotiations, the one phrase bandied around was 'the lack of trust' the most important currency did not take a seat at the table! It had been murdered on its way to the negotiation table.


In the lead up to the downturn, Greece had engaged in what some call a 'credit binge', the country had borrowed money it didn't have and spent it on plush jobs for political supporters from the two major political parties. Anyone who knows the basic principles of business knows that spending more than one makes is a sure path to disaster. Off course, borrowing money to reinvest in activities that generate income is a good thing, but borrowing money to pay salaries, etc. is not sustainable!

As we speak, the Ghana government is the largest borrower from banks in the country. Leading to the point of 'lazy banks' starving out the private sector, preferring to put their money in the security of treasury bills. The country's deficit skyrockets by the day, as we continuously look for new ways to borrow. In the past couple of years, our credit rating has actually dropped, leading to higher interest rates on the international market. One may question what exactly the borrowed money is used for? The payment of salaries to the public sector takes a huge chunk. Some of that money surely goes to sustaining political activity, a heavy chunk goes in between the cracks, but most importantly, we are borrowing and spending way more than we make. When deficits are extremely high, and economic activity is not the focus of expenditure, trouble looms ahead and it may not be a pretty fall, as Greece is finding out!


Tax nightmares were a major factor in Greece's problems. The tax net in Ghana is very small. What this means is that a few companies are over burdened and over taxed, whiles the majority of businesses are totally out to the net. Sustainable measures to broaden the net are not obvious. What is obvious, is an over taxation of the few within the net. Companies that are already struggling to stay afloat. The majority of small-scale businesses and even some medium businesses are both un-banked and untaxed.



We have already began to feel some of the measures that will have to be put in place to activate our bailout, but most importantly, how committed are we to get ourselves out of the conditions that got us here in the first place. The resent election in 'Talensi' and the alleged use of money (money that we don't have), to motivate voting, reeks of our poor resolve and a lack of recognition of the depth of the hole we have dug ourselves into.


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