The Trades Union Congress (TUC) has advised government not to seek an International Monetary Fund (IMF) bailout to address the economic challenges facing the country.
Rather, it said, the government should engage social partners and stakeholders to come out with home-grown solutions to the problems facing the country.
General Secretary of the TUC, Dr Yaw Baah, who gave the advice in an interview before the 3rd Bi-annual Council Meeting of the Union said “IMF is not the solution to the country’s socio-economic challenges.”
The two-day meeting, which among others, was to review the half-year activities of the Union, was on the theme “The Impact of High Interest Rates on EconomicGrowth and Employment Creation.”
DrBaah said “Ghana has gone to the IMF 16 times and there is nothing to show for that.”
According to him, the socio-economic ramifications of an IMF programme would be dire than the current challenges facing the country.
DrBaah said the country had experts and social partners who could come out with solutions to address the challenges facing the economy.
“We will be surprised if the government goes for an IMF programme because we have advised against that and those in government know the consequence of an IMF programme,” the TUC Boss said.
DrBaah called on the Bank of Ghana (BoG) to review its inflation targeting monetary policy it was currently implementing since it had not achieved the desired results.
He said the hiking of policy rate to help combat inflation and withdraw money from the system, was making borrowing very expensive.
The TUC boss indicated that one of the challenges hampering private sector growth and consumption of households was high interest rate, stressing the businesses at the moment had to borrow at interest rates above 20 per cent and that could not make them competitive among their international peers.
The high interest rate, DrBaah said was affecting businesses and causing job losses since businesses could not expand to absorb more workers.
“We are at a stage where if you want to force inflation down at a rapid rate, the effect or cost is lack of jobs. Hiking of policy rate thwarts the expansion of businesses and the way we pay for this is that our young people cannot get jobs. That is why we need agood balance between inflation and interest rate,” he said.
DrBaah stressed that “Low cost of capital is what businesses need to be able to expand. Therefore if you increase interest rates, first you are saying that you are not going to allow businesses to borrow much so they can expand, and if businesses do not expand, it means we cannot create more jobs.”
He said the TUC had made its position on the high interest rate and would continue to highlight the issue for a solution from the BoG.
DrBaah said there was urgent need for more jobs to absorb the growing unemployed youth, and thus the private sector should be supported to fill that void since government alone could not address the growing unemployment conundrum.
According to him, out of the active workforce of 12 million people only about two million were employed.
Turning his focus on the meeting, Dr Baah said it would discuss the impact of high interest rate on businesses, minimum wage and the Single Spine Salary Structure.
BY KINGSLEY ASARE