WILL GHANA RECEIVE AN IMF BAILOUT (CONT’D)

One of the most prominent commentators on Ghana’s present economic crisis is the former president of Ghana, the honorable John Dramani Mahama. In his presentation entitled Building The Ghana We Want he asserted,

“In the last few years, our economy has lurched from crisis to crisis,
ultimately resulting in the most debilitating living conditions in several
decades. Within a space of ten months, our currency, the Ghana Cedi, has depreciated by over 62% against the US dollar which is the highest in recent memory. Our public debt is projected to hover around GH¢ 522 billion by the close of this year, with a corresponding debt-to-GDP ratio of above 100%. The debt service obligation arising from this is monstrous and, is making it impossible to finance almost all critical sectors of the economy. The wage bill has gone up due to unbridled recruitment into all sectors of the public service resulting from a poor capacity of the private sector to mop up the teeming youth graduating from all levels of our educational system. Worse still, Ghana has been classified as the country with the highest likelihood of debt default, which reflects the multiple downgrades by international credit agencies. As it stands, we remain firmly shut out of the international bond market. Inflation is almost 40% and is set to rise higher.“ (GOOGLE NEWS: Building The Ghana We Want, An Address To The People of Ghana by John Dramani Mahama, October 27, 2022).

The former president of Ghana made a number of recommendations that he believes, if pursued, will ultimately result in a turnaround in Ghana’s economy. Some of those suggestions are as follows.

1. Reducing the public debt, debt service obligations, and creating fiscal space. “The biggest problem with our economy today is the growing size of our public debt, estimated to be 522.00 billion GHS (US$40.00 billion) by the end of this year. This must immediately be tackled and stopped from growing further.”
2. The government must cut costs, reduce waste, and spend wisely. This would involve the downsizing of ministries, secretariats, agencies, and a reduction in the size of the budget of the office of the president. He also called for the suspension of all nonessential services, and greater transparency in public procurement.
3. Mr. John Mahama contended, “It is a notorious fact that corruption has defeated the Akufo Addo government. The graft and misapplication of public funds by government appointees call for radical action and not the shielding of perpetrators, as we have sadly witnessed in the last few years.”
4. The former head of state advocated for the stabilization of the currency, cutting the import bill, and job creation. “We do enormous damage to our currency the Cedi, and our economy, when we spend billions of dollars on the importation of rice, sugar, tomato products, frozen fish, poultry, meat products, and vegetable cooking oils. Yet we have more than the potential to produce here to feed ourselves and even export. It is estimated that forex outlays for food products for which we have a comparative advantage to produce locally amount to some US$3 billion every year.” (Ibid).
   • The current president of Ghana the honorable Nana Addo Dwanka Akufo Addo addressed the nation recently. He contended,
   • “For us, in Ghana, our reality is that our economy is in great difficulty. The budget drawn for the 2022 fiscal year has been thrown out of gear, disrupting our balance of payments and debt sustainability, and further exposing the structural weaknesses of our economy. We are in a crisis, I do not exaggerate when I say so. I cannot find an example in history when so many malevolent forces have come together at the same time. But, as we have shown in other circumstances, we shall turn this crisis into an opportunity to resolve not just the short-term, urgent problems, but the long-term structural problems that have bedeviled our economy. I urge us all to see the decision to go to the International Monetary Fund in this light.  We have gone to the Fund to repair, in the short term, our public finances, and restore our balance of payments, whilst we continue to work on the medium to long-term structural changes that are at the heart of our goal of constructing a resilient, robust Ghanaian economy, and building a Ghana Beyond Aid.”
   • . The head of state outlined some measures that he claims are being implemented to remedy Ghana’s present foreign exchange crisis.
   • 1. Enhanced supervisory action by the Bank of Ghana in the forex bureau markets and the black market to flush out illegal operators, as well as ensuring that those permitted to operate legally abide by the market rules. Already some forex bureaus have had their licenses revoked, and this exercise will continue until complete order is restored in the sector.
   • 2. The government is working with the Bank of Ghana and the oil-producing and mining companies to introduce a new legal and regulatory framework to ensure that all foreign exchange earned from operations in Ghana is, initially, paid to banks domiciled in Ghana to help boost the domestic foreign exchange market.
   • 3. The Bank of Ghana has given its full commitment to the commercial banks to provide liquidity to ensure the wheels of the economy continue to run in a stabilized manner, till the IMF Programme kicks in and the financing assurances expected from other partners also come in.
   • 4. The Bank of Ghana will enhance its gold purchasing program.
   • (GOOGLE NEWS: Key Points On President Akufo Addo’s Address On The State of Ghana’s Economy, 31 October 2022).

Since these speeches were given, both detractors and apologists of the NPP and NDC have entered the economic and political debate. Some people have demanded the immediate resignation of the current president of Ghana. While others have made negative comments about the speech given by former president John Mahama. Without a doubt, Ghana is a country with a healthy democratic tradition and vibrant political discourse. Many powerful stakeholders have urged the government to take immediate action to halt the catastrophic slide in the value of the Cedi. Others have accused the president of window dressing and scapegoating. Since foreign exchange buyers and sellers do not control the availability of foreign currency in any country. For its part, the IMF has asserted that if the government of Ghana can demonstrate. That its debt servicing is sustainable, then a deal can be reached. From my own perspective, this is the most elegant form of saying “No,” that I have ever witnessed.