More Questions Over IMF Bailout
President John Mahama
The International Monetary Fund (IMF) bailout that the Government of Ghana is seeking appears to be a decoy to get a better deal from its plans to float a $1.5 billion Eurobond, an economic analyst has alerted.
According to an analyst who confided in DAILY GUIDE on condition of anonymity, the move by the John Dramani Mahama administration is a classic way of gaining market credibility; and this is exhibited in the apparent conflicting messages sent out by the government over its intended relationship with the IMF.
Economists aver that a formal IMF programme for Ghana would likely result in a lower interest rate for the Eurobond. Currently, all rating agencies have downgraded Ghana’s prospects, given government’s unbridled use of public funds which has resulted in huge budget deficits and a proportionally huge public debt.
The government has failed to explicitly define the nature of bailout it is seeking from the Bretton Woods institution, as President Mahama and some government officials churn out conflicting information about the bailout.
In an interview with international news channel, Bloomberg TV Africa in Washington, USA, on Thursday, the President failed to give a clear answer to the nature of bailout the government is seeking from the IMF.
‘We are not looking for a bailout,’ President Mahama said.
‘It is more along a discussion and a programme that we are looking at. If it comes with money, that is fine,’ he added.
In the past couple of months, senior government officials including ministers, have been unclear about government’s bailout plan with the IMF.
The Finance Minister, Seth Terkper, indicated that the IMF would be providing short-term balance of payments support to the government in the bailout; but last week, however, a Deputy Minister of Finance, Mona Helen Quartey and Senior Economic Advisor to the President, Dr. Nii Moi Thompson, counteracted the planned bailout move, saying the government was not making any financial considerations from IMF but rather, it was seeking ‘technical assistance.’
‘Incidentally, a mere technical assistance from the IMF would not require a loan from the financial institution and therefore there would be no conditionalities attached to such advice,’ the analyst noted.
However, information from government sources have hinted that part of the IMF bailout would require government to prune its public workforce.
‘If this is in fact the strategy of government, then it is a very dangerous one. It would severely compromise the credibility and integrity of Ghana in the capital markets for years to come. You deceive the capital markets at your peril,’ he warned.
By Raphael Ofori-Adeniran
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