Tough Times Ahead Over IMF Bail-Out
President John Mahama
The Mahama Administration’s decision to opt for an International Monetary Fund (IMF) economic bailout is likely to bring intense hardship to Ghanaians, critics have warned.
Ghanaians should expect job losses, hikes in utility tariffs and general increments in the prices of goods and services, Dr. Anthony Akoto Osei, a Finance Minister under the Kufuor administration, warned on Monday.
The NDC government had already adopted a set of reforms between 2014 and 2017 that fit into IMF conditionalities for a bailout, including the retrenchment of workers, in its policy document to the IMF entitled, ‘Economic And Financial Policies For The Medium Term’ dated 14 April, 2014. This document contained what the government described as ‘homegrown policies’.
The document was formally submitted to the IMF during the recent Spring Meetings in Washington DC, DAILY GUIDE gathered.
These warnings that an IMF bailout might not be foolproof as was being presented, comes amidst conflicting signals sent by the government on its planned strategy to salvage the rapidly deteriorating Ghanaian economy.
Even though the administration had made it clear at the beginning of the year that it was considering an IMF bailout, earlier last week, the newly appointed 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.
Ms. Quartey told international newswire, Bloomberg that ‘we’re not considering an IMF loan at this time,’ while Dr. Nii Moi Thompson told Joy FM last week that if there was a plan to seek the IMF’s help to rescue the economy, it would not be financial help but ‘technical expertise’.
President Mahama himself had been quoted as saying categorically that his government was not going to foist an IMF programme on the country.
“I wish to take this opportunity to state, with great emphasis, that as President, I have not taken any decision to enter our country into an IMF programme,’ he stated during the Economic Forum recently held at Senchi in the Eastern Region.
The President elaborated on his administration’s plans to rather focus inward to develop strategies to rescue the sinking economy. ‘What we are concentrating on is the preparation of a homegrown strategy of fiscal consolidation. It is our expectation that both our domestic and our international partners will join us in the implementation of this strategy,’ he told participants at the Senchi Forum in June 2014.
It was unclear at what point the government made a complete U-turn on a decision not to go cup-in-hand to the Bretton Woods institution for salvation.
But it appeared that a final decision might have been arrived at after the crucial meeting held at the Peduase Lodge late last week.
The President and his team of economic advisors, including Kwame Pianim, met at the Peduase Lodge near Aburi in the Eastern Region, in an intense brainstorming session to seek options to rescue Ghana’s ailing economy under the platform of the Presidential Advisory Committee.
Some popular names at the meeting dialoguing on economic solutions for Ghana with the President were former Finance Minister Dr. Kwesi Botchwey, the Governor of the Bank of Ghana Henry Kofi Wampa and the Finance Minister, Seth Terkper.
It was immediately after the meeting of the Presidential Advisory Committee that it was finally announced that Ghana had opted for a multi-million dollar IMF bailout to rescue the ailing Ghanaian economy from a potential meltdown, despite serious warnings from some economists, opposition political parties and the labour front under the aegis of the Trades Union Congress (TUC).
‘Your Excellency, times are hard; the prognosis on the economy is not good either, but we must at this point resist the temptation to seek IMF bailout. As we have stated, it is the IMF-sponsored policies that have brought us almost to the brink. No country has developed following the advice of the IMF. Resorting to the IMF for financial support was a mistake we made in the past. We must take responsibility of this mistake and find solution to our problem,’ the Secretary General of the TUC warned the government during the May Day celebration in Accra.
The head of the Political Committee of the Convention People’s Party (CPP), Ekow Duncan, also reiterated these warnings, saying: ‘The IMF bailout is not appropriate.
‘Go for home-grown stabilization measures because if you borrow from the IMF in dollars, it is a very precarious situation.’ Mr. Duncan made reference to similar bailouts from the IMF that did not exactly succeed in alleviating the economic deterioration.
President John Mahama yesterday, in far away United States, dismissed assertions that the government sought a bailout from the IMF due to the failure of its home-grown solutions.
He explained that government took the decision because there was the need for policy credibility and confidence from the international financial institutions to restore economic stability and growth.
The President noted that turning to the IMF was to gain the seal of approval from the Bretton Woods institution for the country’s home-grown measures.
Answering a question about the decision to join the Fund’s programme at GE-Economist event as part of the US-Africa Leaders Summit in Washington DC, President Mahama stressed that there would be no significant changes in Ghana’s domestic policy.
‘We are going to discuss with the IMF how we can turn the deficit around quickly and create the kind of confidence even in the short-term narrative,’ he stressed.
‘We are taking subsidies off fuel and the utilities, streamlining the spiraling public sector wages. We are working to improve revenue collection and efficiency in collecting taxes and also reforming the public financial management system,’ the President stated.
By Raphael Ofori-Adeniran
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