A renowned Economics Professor at the Kwame Nkrumah University of Science and Technology, Prof. Eric Fosu-Oteng Abayie has said that the current circumstances requiring of the Government to seek an intervention from the International Monetary Fund (IMF) are not different from the 2015 IMF bailout sought by the erstwhile John Mahama’s administration, Purefmonline.com reports.
Speaking in an exclusive interview on Kumasi-based Pure FM with Kwame Adinkrah on Monday July 4, the Associate Professor stated that it isn’t surprising the Government has resolved to seek for an IMF intervention.
Prof. Oteng-Abayie explained that the debilitating economic variables remains the same as it was in 2015 when Ghana sought an IMF intervention under ex-President Mahama.
“Kwame, this is the 17th time Ghana is going to the IMF so it is not a new thing to us. The timing of it is also not surprising because our peers like Pakistan, Sri Lanka are all going through a similar situation like ours and they’ve all sought for assistance from the IMF.
What at all can happen? … IMF comes only to help shape our finances better but the politics involved from both our major parties, the NPP and the NDC about the demonization of the IMF is what has become a problem for us.
Ghana has come to a state where our financial status has become worst. The government blames it on the Russia-Ukraine war and the effects of the Covid-19 pandemic but the real question is, since when did Ghana’s financial standing begun to deteriorate?
Some Financial experts in time past had cautioned Government to be weary of our financial future particularly because of how we were handling the financial sector. Government on the other hand assumed they were acting right by trumpeting it’s home grown solutions, which gave birth to policies like the e-levy which has virtually become like a nuisance tax because it is failing to realize it’s projected outcomes.
The e-levy has become unpopular like the luxury tax previously introduced, which comes as an additional burden on Ghanaians.
Our current economic situation is not very different from the circumstances in 2015 when Ghana sought for an IMF bailout under then President Mahama.
Like 2015, we have problems with servicing debts, inflation is on the rise, interest rate is high, there’s more imports as compared to exports, our capital account hasn’t changed. These are the similar challenges that existed in 2015 necessitating our IMF bailout approach.
Now, we fundamentally have macroeconomics instability that makes it not a surprise and worrying if Government seeks an IMF bailout.”
“The Government on their part should look for the things that they might not be doing right which make them lose credibility rather than soliciting for IMF’s help to gain the lost policy credibility.
The templates are already there. At least, that of Malaysia’s is still there, Government’s should be nationalistic so that we can deliberately achieve fiscal discipline and grow our economy.”
“Steve Hanks is partly right when he argued that this new bailout request will not amount to anything. It is so because what exactly did we achieve with our 16 times IMF bailout request in the long term?
We know our problems ourselves and there are viable solutions. Look at the size of our government and the amount being paid to Article 71 office holders? If we think we are in hard times, then we must implement expenditure rationalization. We know our problems and we can give several examples to that effect but in practice, we fail to execute the solutions.
The inflation rate is too high. The government must act right to solve it. The Government has a record from 2017-2018 in achieving a single digit inflation and a stable macroeconomy. They should act right like they did before to get us out of the woods.” Prof. Eric Fosu Oteng-Abayie explained to Kwame Adinkrah on Pure FM.
Ghana is set to hold talks with the International Monetary Fund (IMF) on a support package.
The Nana Addo Dankwa Akufo-Addo administration had refused to seek an IMF bailout despite the massive economic downturn in the last six months, but now decided to seek support from the Bretton Woods institution.
In a comparative analysis between the leading political parties in the country, the ruling New Patriotic Party have argued that the current circumstances necessitating the Government’s resolve to seek for an IMF intervention is different from what existed under the erstwhile NDC’s John Mahama administration in 2015.
The NPP has blamed the effects of the Russia-Ukraine war and the Covid-19 global pandemic as the reason why Ghana’s economic standing has weakened.
Source: Purefmonline.com || 2020
