WILL GHANA RECEIVE AN IMF BAILOUT

The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is “working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.” Formed in 1944, started on 27 December 1945, at the Bretton Woods Conference primarily by the ideas of Harry Dexter White and John Maynard Keynes, it came into formal existence in 1945 with 29 member countries and the goal of reconstructing the international monetary system. It now plays a central role in the management of balance of payments difficulties and international financial crises. Countries contribute funds to a pool through a quota system from which countries experiencing balance of payments problems can borrow money. As of 2016, the fund had XDR 477 billion (about US$667 billion). The IMF is regarded as the global lender of last resort. (WIKIPEDIA: The International Monetary Fund).

The country of Ghana has been experiencing severe foreign exchange difficulties of late. No one has been able to codify the exact nature of the problems that have precipitated this crisis. Although there have been a plethora of calls for the Government of Ghana to rectify this situation speedily. Such calls have come from celebrities such as Yvonne Nelson who has publicly called on Ghana’s president Mr. Nana Addo Akufo Addo to halt the persistent and catastrophic slide of the Cedi. Since its fall was making her eye medication increasingly unaffordable.

“Ghanaian preacher, Prophet Kofi Oduro has criticized Akufo-Addo for what he describes as the President’s recent arrogance. According to the founder of the Alabaster International Ministries, Akufo-Addo has departed from the humility that endeared him to voters in his bid to be president. Addressing his congregants on Sunday, the energetic pastor seized the opportunity to warn the president about his pride and the consequences that await him. In his open admonishment, he said if Akufo-Addo does not repent from his pride, his government will go down as the worst regime in Ghana’s political history. (JOY ONLINE: You’ve Become Very Arrogant, by Paa Kwesi Schandorf, 24 October 2022).

Such calls and complaints have come from a wide cross-section of Ghanaian society, particularly traders involved in importing goods and services from abroad.

“The Butcher’s Association in the Sekondi-Takoradi Metropolitan Area has added its voice to the call on the Government to redeem the Ghanaian Cedi from its constant depreciation to major foreign trading currencies. The Association which relied heavily on Niger, Mali, and Burkino Faso, for animals for the Ghanaian market, complained about the hikes in CFA Franc against the Cedi and the trade burden it posed. Mr. Anaba Mohommed, The Takoradi Butcher’s Association Chairman told The Ghana News Agency that currently, an individual needs some 1500 Cedis for an equivalent of one million CFA while in the most recent past the same 1500 Cedis would give almost 2 million CFA.” (GHANA NEWS AGENCY: Butchers In Sekondi-Takoradi Urge Government To Redeem The Cedi, By Mildred Siaba-Mensah, August 24, 2022).

Even elected parliamentary members of the NPP are calling on President Akufo Addo to dismiss the present Minister of Finance and sacrifice him as an appropriate scapegoat for Ghana’s present economic and financial difficulties.

“Some Members of the Majority Caucus in Parliament have called for the immediate dismissal of Ken Ofori-Atta as Minister for Finance by President Nana Addo Dankwa Akufo-Addo. The MPs also want the Minister of State at the Ministry of Finance, Chares Adu Boahen, to be sacked. Numbering about 80, the MPs who constitute “a greater number of the Majority Caucus” have thus threatened to vote against all government businesses that will come before the House. At a press conference addressed by the Asante Akyem North MP, Andy Appiah-Kubi, the MPs said Mr. Ofori-Atta and Mr. Boahen have run the economy aground and must be shown the exit.” (GHANAIAN TIMES: 80 Majority MP’s, Minority Caucus Demand Dismissal Of Ofori Atta, Adu Boahen, By Julius Yao Petesi).

Neither The Governor of The Bank of Ghana nor The Minister of Finance nor any other credible authoritative source. Has attempted to outline to the country, the reason for the collapse of the Cedi’s value. Everyone seems to prefer to participate in a futile blame game. This West African Republic, originally known as The Gold Coast has a population of approximately 35,000,000 people. Most of the items sold in the local stores such as refrigerators, television sets, smartphones, pots, plates, and cutlery are imported from abroad. These are just the basics that are present in most third-world countries. I have yet to mention buses, coaches, tractors, trucks, expensive motorcars, and a host of other luxurious consumer goods. All of which are imported from overseas. According to Trading Economics, Ghana’s gross domestic product in 2021 was US$77.59 billion. Statista states that “In 2021, 30.87 billion U.S. dollars of goods and services were imported into Ghana. This would be an increase compared to the two preceding years. Furthermore, in terms of goods, motor cars and transport vehicles were the leading commodities imported into Ghana in 2019, as they registered the highest value.”

According to Statista In 2022 alone Ghana’s national debt will be 84.7% of the GDP. Some estimates have Ghana’s total indebtedness well in excess of 100% of GDP. This is an extremely onerous burden to bear for a developing country that up until recently did most of its borrowing abroad. Currently, the nation has been shut out of the Eurobond market. Since Fitch has downgraded Ghana’s Bonds to junk status.

(TO BE CONTINUED)