Business News of Thursday, 20 July 2017
Economist, Dr. Eric Osei-Assibey is of the view that government’s decision not to extend the IMF External Credit Facility programme may be due to conflicting plans with the conditionalities of the fund.
President Akufo-Addo yesterday announced that government will not extend the programme, when the duration is met next year, contrary to earlier assertions that government may extend it to help achieve the target. The president said this at a maiden encounter with journalists.
But speaking to Citi Business News on the issue, Dr. Osei-Assibey maintained that government’s intention to spend more at critical sectors of the economy to fulfill its political campaign promise may be against some of the IMF conditionalities.
“If you take Free SHS for example, education is a critical area for the country and they may want to spend more there to fulfill the promise. Probably government has an alternative policies , programmes or strategies to achieve the same outcome or a better outcome rather than relying on the IMF, that will be my understating,” he observed.
He added that the economic challenges that are being addressed by the IMF conditionalities will not end evn if government decide not to extend the programme.
“The position has been that, if you look at the IMF programme , especially the structural reform , then in the medium to the long term, then it is in the interest of Ghana. When it comes to structural reforms in this country, we are unable to drive that on our own,” he explained.
Pointing out some key isssues that must be tackled, Dr. Osei-Assibey stated that the purpose of the conditionalities is to be fiscally discipline, and reduce the budget deficit that constrains the private sector from accessing funds due to domestic borrowing.
“We have a new a president who believes in Ghana, and the fact that a home-grown policy can work. But we do not have that alternative programme, strategies and policies to be able to evaluate side by side with the IMF programme. It is also evident from the 2017 budget, that the budget itself doesn’t contain sufficient productivity enhancing reform in the budget that will substitute for the IMF programme,” he warned.