On July 1, this year, the government announced its intention to go for an International Monetary Fund (IMF) support package.
Interestingly, in July 2017, six months after assuming power on January 7, the Akufo-Addo administration said it would not extend the country’s running three-year IMF aid beyond April 2018, the expiry time.
What changed for the administration to reverse its decision exactly after five years?
Earlier in May, the Bank of Ghana had said that the country faced an overall balance of payments deficit of $934.5 million in the first quarter of 2022, compared with $429.9 million in the same period last year.
That was to say the country’s balance of payment deficit had more than doubled in a year.
Factors like the impacts of COVID-19 and the war in Ukraine were worsening the macroeconomic indicators or factors such as inflation, price levels, rate of economic growth, national income, gross domestic product (GDP), and unemployment.
The precarious economic situation had already caused a section of the population to demonstrate against the mounting hardship.
Analysts, therefore, supported the government’s decision to go to the IMF, describing it as inevitable as the financial aid would help the government address the prevailing challenges.
The government is seeking a $3-billion assistance.
The package is, thus, needed to assist in restoring macroeconomic stability; safeguard debt sustainability; promote inclusive and sustainable growth; and address the impacts of the war in Ukraine and the lingering COVID-19.
Currently, there is an IMF staff team in the country continuing discussions with the government on policies and reforms that could be supported by the lending arrangement.
Even before its team would arrive on September 26 and stay till October 7, the IMF had responded to questions on its website that Ghana’s fiscal and debt vulnerabilities were worsening fast amid an increasingly difficult external factors.
It said further that among other things, its support would provide space for Ghana to implement policies which would restore macroeconomic stability, protecting the most vulnerable parts of the population; create conditions for inclusive and sustainable growth and job creation; strengthen policy credibility and alleviate exchange rate pressures.
The sum of it all is that the IMF bailout would restore macroeconomic stability.
The Ghanaian Times would not like to doubt what the experts are saying but only wishes to comment that when in 1966 Ghana first applied to the IMF for a bailout, the global body gave hopes of helping the country get out of its economic woes.
However, this is the 17th time the country is seeking IMF assistance.
Are the IMF promises hoax or the country’s political administrations have been mismanaging the economy.
Some of us agree that the current factors making it imperative to go for IMF bailout are real but we cannot always blame external factors for our woes when it is clear certain expenditures and corrupt practices were not checked.
Is it not worrying that the country is seeking $3 billion from the IMF when it lost the same amount through corruption in 2019 and the Ministry of Finance estimates that the country loses $4 billion annually to corruption?
What about the profligate payments made to Article 71 officeholders?
If the country’s economy is not weaned from corruption and profligate expenditures, any hopes of an IMF bailout restoring macroeconomic stability would be a mirage.