Ghana is heading to the International Monetary Fund (IMF) for support despite repeated assurances given by the Finance Minister Ken- Ofori Atta that the country would not return to the Bretton Woods institution.
On Friday July 1, the Ministry of Information announced in a statement that President Nana Addo Dankwah Akuffo-Addo has instructed Mr Ofori-Atta to commence formal engagements with the IMF, inviting the Fund to support an economic programme put together by the Government of Ghana.
This followed a telephone conversation between the President and the IMF Managing Director, Miss Kristalina Georgieva, conveying Ghana’s decision to engage with the Fund.
This development comes after the Mr Ofori-Atta vehemently stated on several occasions that Ghana was not returning to the IMF.
It is recalled that some analysts including Chief Operations Officer at Dalex Finance Mr Joe Jackson had called on Ghana to go to the IMF.
Mr Jackson argued that the country would not be able to resolve its fiscal challenges without going for the support.
Speaking in interview with TV3’s Komla Adom on the mid day news on Tuesday June 21, Mr Jackson said “I think the IMF is the most option to check the excesses we face.
“Our budget deficit is huge, there is no fiscal space, we need the IMF to support us so that the foreign markets and the flow of funds will be maintained. I honestly don’t see how we will get round this without going to the IMF.”
Another economist, Dr Adu Sarkodie also noted that Ghana was likely to return to the IMF.
He said if this finally happens, it would affect some of government’s programmes such as the free Senior High School, Nation Builders Corps (NABCO) and others.
“We are likely to go back to the IMF. I don’t like it when we go there because of the conditionality. They may ask us to cancel Free SHS, NABCO, and all that but this is the time we need all these social interventions,” Dr Adu Sarkodie told 3FM on Thursday June 16.
But in the view of Mr Ofori-Atta, the government had put in place measures including salary cuts and others, and also programmes to deal with the fundamental issues affecting the economy hence no return to the IMF.
He said these when he was asked by expatriate journalist whether Ghana would consider going back to the IMF, at a press conference in Accra on Thursday May 12.
He said while answering the question that “All the white folks are just interested in us coming in the IMF programme. I always wonder why.”
“We are members of the fund; there are two major points of interventions that we have from the fund. One being the advise that we get because of the phenomenal expertise that the fund has and then secondly, these programme interventions which bring us some resources.
Prior to this, he had indicated the decision not to go the IMF during the Townhall meetings on the e-levy.
Speaking at the 3rd Townhall meeting on Thursday February 10, at the the Radache Hotel in Tamale in the Northern Region, he indicated that a return to the IMF would have dire consequences.
“I can tell you, as my colleague deputy said, we are not going back to the IMF, whatever we do we are not [going back]. The consequences are dire, we are a proud nation, we have the resources , we have that capacity, don’t let anybody tell you … we are not people of short-sighted, we need to move on,” Mr Ofori-Atta said.
Some economists also cautioned against going to the IMF for support.
For instance, an Economist, Dr David Yaw Mordy, asked Ghana not to entertain the idea.
He said the IMF usually gives conditionalities that are not favorable to the ordinary Ghanaian hence, the managers of the economy should not be thinking of going to them for assistance.
Dr Mordy explained on the mid day news on 3FM with Eric Mawuena Egbeta, Monday June 27 that countries go to the IMF for policy credibility.
That credibility, he said, can be gained without the support of the Bretton Woods institution.
“The issue has to do with the fundamentals of our economy with respect to the exchange rate, Gross Domestic Product, inflation and then other indicators particularly inflation, and GDP is flourishing and we are within the range of 3.3 to 4 per cent, inflation about 27 per cent to 30 per cent.
“So things are very hard in Ghana but that doesn’t mean that we should be opting for IMF. We know, IMF comes with a lot of conditionalities , the conditionalities are not favorable to the ordinary Ghanaian. So the IMF should not be part of the equation.
“We go to the IMF for policy credibility. If in 2020 you have overspent, the following year you try to scale it down. We have made the law, Fiscal Responsibility Act which mandates you to be within a certain threshold. All you have to do is to reduce you consumption expenditure ,and expand your capital investment, that is the only way we can address the fundamental issues in the economy,” he said.
The Trades Union Congress (TUC) also cautioned against going to the International Monetary Fund (IMF) for support.
Secretary General for TUC Dr Yaw Baah said the IMF was not the solution to the challenges facing the country.
He told TV3 in an interview on Wednesday June 29 that Ghana has been to the Bretton Woods institution sixteen times but that has not solved the problems.
“We have advised government not to go the IMF because IMF has no solution for Ghana. Government has been to IMF 16 times for IMF programmes but we are where we are today. Therefore, that is not the solution, It is like saying this is not working but let us do more of it, it doesn’t make sense. We will be very surprised if government goes to IMF,” he said.
