IMF Is Not Solution To Ghana’s Economic Woes – Oppong Nkrumah

The Minister of Information, Kojo Oppong Nkrumah has clarified that the fundamental problems of Ghana’s economy are expected to be addressed by the Post Crisis Programme for Economic Growth (PC-PEG) of the government and not neccessarily as a result of the current arrangement with the International Monetary Fund (IMF).

The IMF board in May this year approved Ghana’s request for a $3 billion bailout resulting in the release of the first 600 million dollars to the Bank of Ghana.

The subsequent releases hinged on Ghana meeting certain conditionalities set by the Fund which includes improvement in domestic revenue mobilization.

But Ghana missed out on the November 1 timeline set in the International Monetary Fund (IMF) programme to get a second tranche of the $3 billion bailout package as the country’s debt rework negotiations with external creditors delay.

The Minister of Information, in an interview with JoyNews’ Emefa Apawu on The Probe on Sunday, November 12, insisted that no deadline has been missed yet.

“The first review has been concluded and Ghana was successful in that review. I think at the end of that review, there was a joint conference between Ghana’s Finance Minister and the Head of the IMF team, and a staff level agreement was signed and announced to undergird our parts of the first review. And then it was mentioned that the staff level agreement would have to go to the IMF Executive board which board meets in the 3rd week of November to give its approval, and when that approval is given, then the second tranche would be disbursed.”

“Actually, this is the structure for all the tranches. I think if I read the statement from the Ministry of Finance quite clearly, they made the point that once it is quite clear that the executive board meeting is in the third week of November, it will be incorrect for anyone to say that there is a timeline that has already been missed,” he explained.

While he says efforts were being made to access the second tranche, the Ofoase-Ayirebi legislator pointed out that this IMF transaction is not the solution to the country’s problems.

“Anytime I speak about the IMF, I am quick to mention that the IMF transaction is not the solution to our problems. The IMF transaction is financing to underpin our PC-PEG [Post Crisis Programme for Economic Growth], which is our programme to recover from the economic challenges that we’ve had. The entire world has had economic challenges. In fact, I was watching a speech of the former President Mahama delivered abroad just about a week ago where he explains how the challenges in the global economy affected the Ghanaian economy. Everybody knows that there has been a global economic challenge and it has affected Ghana, and various countries have been developing their various plans.

“If you go to America, they’ve passed the Inflation Reduction Act, aimed at responding to some part of it in addition to their hikes in Monetary Policy rate. If you go to England, they’ve introduced the Energy Price Cap Guarantee and without a timeline on it, it sent some shocks into their investor market and affected currency. In Ghana, we introduced the PC-PEG, the Post Crisis Programme for Economic Growth, and we mentioned on the 1st of July 2022 that we needed funding to execute it, so what the IMF is providing is funding which is executing it.”

We have to back home, get aggressive with our economic measures so that on the economic policy front we can grow the economy, expand and create jobs for people, bring down cost of living, inflation and the cost of doing business. And then on the fiscal front as well, ensure that we narrow the gap between our revenue and expenditures” he added.

Government is still in talks with its external creditors for debt relief worth $10.5 billion. The country has already submitted proposals to its commercial creditors seeking a haircut of up to 40% and additional debt rework with its bilateral creditors including China and the Paris Club.

JoyNews checks from the Fund’s programme document reveal that Ghana has not been able to meet all the necessary financing assurances from its creditors to unlock the disbursement of the second tranche worth $600 million which was scheduled to hit Ghana’s account by November 1, 2023.

Prior to the first disbursement, Ghana had to secure financial assurance from its external creditors, a requirement fulfilled before the IMF Executive Board approved the payment.
Under the three-year ECF programme, the Ghanaian government plans to restructure around $10.5 billion of its external debt, which stood at nearly $30 billion in June 2023.

There have been differing opinions on the conditions for receiving the second tranche of $600 million, which would bring the total disbursement to $1.2 billion after the Fund’s first review.

The IMF’s directive is explicit: Ghana is required to secure financial assurance from its external creditors before gaining access to the subsequent $600 million tranche. Reaching this agreement with creditors is anticipated to elevate the total disbursement under the Fund’s program to $1.2 billion.

Additionally, Ghana’s debt arrangement with foreign creditors is projected to release approximately $2.5 billion in 2023 alone, aiding in bridging Ghana’s Balance of Payment deficit.

Joynews