Ghana Eyes IMF For Economic Bailout

By Papisdaff Abdullah

Finance Minister, Ken Ofori-Atta

Ghana’s President, Nana Addo Dankwa Akufo-Addo, has authorized Finance Minister, Ken Ofori-Atta to commence formal engagements with the International Monetary Fund (IMF), inviting the Fund to support an economic program put together by the government of Ghana. In a statement, President Akufo-Addo, said he had authorized Finance Minister Ken Ofori-Atta to commence formal engagements with the International Monetary Fund (IMF), inviting the Fund to support an economic program put together by the Government of Ghana.

The statement issued by the Ministry of Information said this follows a telephone conversation between the President and the IMF Managing Director, Miss Kristalina Georgieva, conveying Ghana’s decision to engage with the Fund.  At a meeting on June 30th, 2022, cabinet indicated its support for the decision. The engagement with the IMF will seek to provide balance of payment support as part of a broader effort to quicken Ghana’s build back in the face of challenges induced by the Covid-19 pandemic and, recently, the Russia-Ukraine crises, according to the statement from the presidency.

IMF not an option

In February 2022, the Finance Minister, Ken Ofori Atta, stated that Ghana will not return to the IMF for a bailout despite the mounting economic challenges. According to him, Ghana is a nation of pride and will seek solutions to the current financial challenges it is facing within. “I can say we are not going to the IMF. Whatever we do, we are not. Consequences are dire, we are a proud nation, we have the resources, we have the capacity. We are not people of short sight, but we have to move on. “So let’s think of who we are as a strong proud people, the shining star of Africa, and we have the capacity to do whatever we want to do if we speak one language and ensure that we share the burden in the issues ahead,” Mr Ofori-Atta told the gathering at the E-Levy town hall meeting in the Northern Regional Capital of Tamale.

U-Turn

The position of the government has however changed. Ghana’s economy is currently in dire straits with worsening public debt, rising inflation, fuel prices, cedi depreciation among others. Recent data released by the Bank of Ghana puts Ghana’s total public debt stock, as of March 2022, at US$ 55.1 billion (GH¢391.9 billion). In dollar terms, the debt dropped by over $3 billion in the first 3 months of the year, from $58.4 billion in January to $55.1 billion in March.  This is the second time Ghana is seeking support from the Bretton Wood institution in seven years after the country engaged them in 2015 under the erstwhile John Dramani Mahama’s government.  Several efforts by the government including the introduction of the Electronic Transfer Levy (E-levy) to shore up enough revenue to salvage the worsening economic conditions haven’t yielded any positive results. The Electronic Transfer Levy (E-levy) introduced by the government to generate additional cash for the government is raking in only 10% of the estimated revenue.

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