Economist makes strong case against any move by Ghana to return to IMF
An Economist, Dr David Yaw Mordy, has said Ghana should not entertain the idea of returning to the International Monetary Fund (IMF) for support.
He said the IMF usually gives conditionalities that are not favorable to the ordinary Ghanaian hence, the managers of the economy should not be thinking of going to them for assistance.
Dr Mordy explained on the mid day news on 3FM with Eric Mawuena Egbeta, Monday June 27 that countries go to the IMF for policy credibility.
That credibility, he said, can be gained without the support of the Bretton Woods institution.
“The issue has to do with the fundamentals of our economy with respect to the exchange rate, Gross Domestic Product, inflation and then other indicators particularly inflation, and GDP is flourishing and we are within the range of 3.3 to 4 per cent, inflation about 27 per cent to 30 per cent.
“So things are very hard in Ghana but that doesn’t mean that we should be opting for IMF. We know, IMF comes with a lot of conditionalities , the conditionalities are not favorable to the ordinary Ghanaian. So the IMF should not be part of the equation.
“We go to the IMF for policy credibility. If in 2020 you have overspent, the following year you try to scale it down. We have made the law, Fiscal Responsibility Act which mandates you to be within a certain threshold. All you have to do is to reduce you consumption expenditure ,and expand your capital investment, that is the only way we can address the fundamental issues in the economy,” he said.
His comments came at a time a leading member of the governing New Patriotic Party (NPP), Gabby Otchere Darko said in principle, he was not against the IMF programme.
Gabby explained that he is not for an IMF programme that gives the country peanuts but imposes conditions that will end up hurting the poor, jobs and businesses more.
In series of tweets on Monday June 27, he said “Am I against an IMF program in principle? No”
“I am not for an IMF program that throws peanuts at us but imposes conditions that will end up hurting the poor, jobs and businesses more. Covid-19 and War in Ukraine are not of Africa’s doing but more to our doom. A program that pretends it is all our doing is doomed to fail.”
“We do something that will inject confidence in our capacity to ride this heavy storm and that something should happen pretty quickly. Are you against an IMF program?”
Recently, the Chief Operations Officer at the Dalex Finance, Mr Joe Jackson said that Ghana needs to go back to the IMF.
It was his view that the country was not going to be able to resolve its fiscal challenges without going to the Bretton Wood institution for support.
Speaking in interview with TV3’s Komla Adom on the mid day news on Tuesday June 21, Mr Jackson said “I think the IMF is the most option to check the excesses we face.
“Our budget deficit is huge, there is no fiscal space, we need the IMF to support us so that the foreign markets and the flow of funds will be maintained. I honestly don’t see how we will get round this without going to the IMF.”
Another economist, Dr Adu Sarkodie also said recently that Ghana is likely to return to the IMF for support.
He said if this finally happens, it would affect some of government’s programmes such as the free Senior High School, Nation Builders Corps (NABCO) and others.
“We are likely to go back to the IMF. I don’t like it when we go there because of the conditionality. They may ask us to cancel Free SHS, NABCO, and all that but this is the time we need all these social interventions,” Dr Adu Sarkodie told 3FM on Thursday June 16.
The Finance Minister, Ken Ofori-Atta, recently insisted that Ghana would not go back to the IMF for support.
In his view, the government has put in place measures including salary cuts and others, and also programmes to deal with the fundamental issues affecting the economy.
Mr Ofori-Atta said these when he was asked by expatriate journalist whether Ghana would consider going back to the IMF, at a press conference in Accra on Thursday May 12.
He said while answering the question that “All the white folks are just interested in us coming in the IMF programme. I always wonder why.”
“We are members of the fund; there are two major points of interventions that we have from the fund. One being the advise that we get because of the phenomenal expertise that the fund has and then secondly, these programme interventions which bring us some resources.
“I think, if you see from the budget that we constructed for 2022 and the subsequent announcement that we have done, clearly, the issue of Ghana having the capacity to think through the consolidation exercise exist. Also discipline itself with regards to the 20 per cent, etc, that we have shown clearly.”
He further indicated that “We have committed to not going back to the fund because in terms of the interventions and policy we are right there, the fund knows that we are completely in the right direction. The issue is, validating the programmes that we have put in place and then, in my view, supporting us to find alternative ways of financing or re-financing our debt, reprofiling it.”
