Captains from academia, industry and the trading community say, a balance of payment support programme from the International Monetary Fund (IMF) will repose confidence and bring stability in the Ghanaian economy.
They said the country critically needed such confidence and stability to enable it access the international financial market, which had been closed to the Government for loans since January this year, after a downgrade by major global rating firms.
They said this during a media engagement as the Government begins discussions with the Bretton Woods institution for a concessional financing programme to restore policy credibility and achieve fiscal and debt sustainability.
The experts, however, called on the Government and Parliament to urgently pass the Tax Exemptions Bill, which was introduced in 2019 to save the country from losing about GHS5 billion annually to foreign entities, and be financially prudent.
Additionally, they asked the Government to implement programmes that would enhance the country’s productive sectors and strengthen programmes like the One District-One Factory (1D1F) and Planting for Food and Jobs (PFJ).
Professor Godfred Alufar Bokpin, an Economist, said: “Already, with the announcement of the engagement with the IMF, we’ve started seeing some development in our market and the Eurobond market.”
He added that though the macroeconomic stability that the IMF would bring into the country was “not an end in itself,” it would help businesses, which currently needed it amid the economic challenges.
The Professor of Finance at the University of Ghana Business School (UGBS) noted that: “The exemptions bill went to parliament, Government wasn’t really committed to passing that bill even though they submitted it to parliament to fulfill righteousness under the IMF programme and up to now, it’s not been passed.”
Mr Seth Twum Akwaboah, the Chief Executive Officer (CEO), Association of Ghana Industries (AGI), also said that an IMF programme would bring stability, which businesses needed to plan effectively.
“We wish we wouldn’t have got to the point where we needed an IMF intervention to stabilise our economy. However, under the circumstances, we don’t have a choice, but stability is critical for businesses. Therefore, we support the idea of going to the IMF for interventions to have some stability,” he said.
He, however, said that there was the need to look at measures that would transform the economy in the long term beyond interventions by the IMF that would lead to economic stability.
Mr Akwaboah said: “Let’s have stability, but our ideas and plans for transforming the economy shouldn’t be lost. We should continue that agenda and do everything possible to help transform the economy. If we change the structure [of our economy], eventually, we may not need IMF intervention.”
“But that requires a lot from us; discipline is important. Pushing resources into sectors that are most productive and generating the kind of employment we need and broadening the tax net. If we do these things right, then we can be in a good step for the future where we wouldn’t need an IMF intervention to stabilise our economy,” he said.
Dr Joseph Obeng, the President of the Ghana Union of Traders Association (GUTA), said, going to the IMF would help the country gain confidence in investors and the capital market.
The Trade Unionist, however, called on the Government to create an enabling environment that would support sustainable growth in agricultural productivity and manufacturing.
He also said that: “We need to revise the way we’re managing our economy by way of our investment policies so that we can retain some of the monies that expatriates send out of the country.”
“Our expenditure patterns have been the bane, so we have to prune down on our expenditure by reducing the size of Government, and not burden the businessperson with taxes.” Dr Obeng added.
According to the Government, Ghana’s recent move to the IMF had been necessitated by the economic challenges imposed on the country by the adverse effects of the COVID-19 pandemic and the Russia-Ukraine war.
This had resulted in high and rising inflation, tightening financing conditions from less accommodative monetary policy stance, exchange rate depreciation, an elevated debt burden with high debt service, and a widening Eurobond spread.
The Government has expressed confidence that engaging the IMF to support its Enhanced Domestic Economic programme with the suitable amount of financing would help Ghana “weather the storm and protect its citizens.”