Ghana-IMF program: Economists unhappy with public sentiments

The government of Ghana is faced with stiffen opposition to its IMF Extended Credit Facility from the general public, including key stakeholders whose daily activities contributes a lot to the economy, which think the program has brought untold hardship on them.


Also, some economists have noted that, the government had no other option than to stick to the IMF to help heal the ailing economy, and thereby throwing their support to the IMF program.

Former Finance Minister Professor Kwesi Botchwey is expected to lead Ghana's team to negotiate with the IMF.
Former Finance Minister Professor Kwesi Botchwey is expected to lead Ghana’s team to negotiate with the IMF.
The Economy Times has monitored with keen concern the pressure that keeps mounting on the government to consider cancelling its bailout program with the International Monetary Fund (IMF) which will end in 2017.

The oppositionists to the IMF bailout has argued that, conditionality’s has brought a lot of economic hardship unto the ordinary citizens at a time when the global economy has also not been stable.

Apparently, Chief Executive of the Institute of Certified Economists, Daniel Amateye Anim has stated that Ghana cannot survive without the assistance of the International Monitory Fund (IMF) under the current circumstances.

This, according to him, was due to the country’s current economic situation and government’s inability to adhere to fiscal discipline, among others.

“For now I am afraid the country can’t do without IMF until we begin to manage our economy well and put right policies and structures in place,” the economists said in an interview.
The outgoing General Secretary of the Trades Union Congress (TUC), Kofi Asamoah, has consistently bemoaned government’s decision to always seek bailout from the International Monetary Fund (IMF) as against home grown solutions.

According to him, Ghana has the requisite trained personnel with the expertise which can solve the country’s problems without imposition of stiffer controls on the country.

He expresses that the weak nature of Ghana’s economy has taken a huge toll on the livelihoods of the people.

Also, some civil society organisations and public sector workers have lashed out at government for accepting what they term “harsh conditions’ which have been imposed on Ghanaians.

Public Sector Employment in some sectors were frozen, spending within budget, especially in an election year were some of the conditions the country had to abide by or face the wrath of the IMF.

The IMF bailout according to Mr Asamoah, has not benefited Ghana in anyway, noting it has rather tightened the grip on an already tough economy. He said government should cancel the agreement and turn to homegrown policies and ideas which are potent enough to save the economy.

“Government introduced the IMF programme in 2015, but these policies are not working. Ghanaians are getting poorer every day under the IMF programme. We, therefore, urge you and your government to abandon the IMF programme.” Mr. Asamoah stressed.

Meanwhile, Professor Godfred Bokpin, an economist and Head of Finance at the University of Ghana Business School, has said clamours by the Trades Union Congress (TUC) for government to suspend the International Monetary Fund’s US$918million Extended Credit Facility and rather stick to home-grown policies lack merit.

To him, “the economy is still weak and has had very negative effects on our living standards across all socio-economic groups in the country. A significant number of our compatriots are suffering from extreme levels of poverty.” Mr. Asamoah added: “IMF programmes have never worked anywhere and will never work here [Ghana].”

Ghana signed up for the programme in April 2015 after fiscal challenges triggered an over-expenditure of 12 per cent.

The country received an initial $144.8 million in April 2015 and a second tranche of $115 million in August. The government is expecting a third tranche of $116million, being part of the $918million credit facility.

However, Professor Bokpin maintains that: “If anybody says that: ‘Abandon the programme, let’s go home-grown!’ we will say that how does he justify that call? I will say no, because the reasons why we went for the IMF programme were essentially as a result of a twin deficit: current account deficit and then the fiscal deficit that came as a result of the election year excesses of 2012.

I do agree that some of the IMF programme objectives have not been achieved and the reason is not necessarily because of the programme design, but more because of the unrealistic assumptions underlying the programme for which Ghana ought to blame itself.

Now when you also read the IMF programme, there is a tacit admission in that programme where Ghana government acknowledged that the home-grown policy actually failed to deliver on its programme objectives.”
President John Dramani Mahama recently gave assurance that Ghana will come out of the three-year programme with the IMF with single digit inflation.

The President maintained that government has been able to abide by most of the conditions set by the board of the International Monetary Fund (IMF).

“Our programme with the IMF ends next year. We will come out of it with a more robust economy. Since January, we’ve been implementing zero central bank financing. We will come out of the IMF programme next year with inflation at single digit, a deficit to GDP below 3 percent,” he declared.

But, Mr Anim quizzed that, “I can remember that President Mahama, in his inaugural speech at the Senchi economic forum, promised not to go to the IMF but what happened?
So this is not about saying it but it’s about putting right structures in place; it’s about making sure that your economy has what it takes to sustain itself,” he said.
He said, “When your expenditure keeps exceeding your revenue and you are not channeling your resources to sectors that will grow the economy, then you would have no choice but to resort to IMF programme.”

Mr Anim said even though IMF programme came with a lot of unfavorable conditions for the citizens, the country had no option.

“It’s better you don’t go for IMF support because it comes with conditions that may not help the citizens. But then again for you to be able to stay away from the IMF, you need to manage your resources very well. If you don’t do that, then you will have to resort to IMF,” he said.

Since the beginning of last year, 2015, the government has been severely criticised for turning to the IMF for a bailout programme, which is expected to among other things, improve the economy and strengthen it in the face of the challenges facing it.

Although, the Finance Ministry has come out to clear doubts of government abandoning the IMF bailout program, however, as the debate rages on, with more pressure mounting on government to abandon the program, it leaves more room for uncertainties and a bleak future of the country’s economic situation.

More questions are therefore begging for answers, amongst them are; what will be the immediate effect and impact if government heeds to the pressure? Again, what will be the alternative economic policy and decision to be introduced to avoid shocks?

Also, another pertinent question that will need to be addressed is that, is the government having plan B already in place for emergencies?
These questions need to be critically analysed and answers sought for to avert any future SOS management of the economy.

Proactiveness is a necessary hallmark of any excelled economic management teams of countries around the world.

-Adnan Adams Mohammed

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