The government has been advised to seek economic assistance programme from the International Monetary Fund to bring back life into the Ghanaian economy.
Former Finance Minister, Seth Tekper recently urged the government to consider a “Home Grown” or “External” programme to revitalize the economy which has been saddled with high debt and financing gap, partly due to the COVID-19 pandemic.
The rippling effects are high fuel prices and increasing cost of living.
Head of Finance Department of at the Valley View University, Dr. Williams Peprah, told Joy Business the country has no option than to return to the IMF.
“Though we are afraid of going to IMF, but probably where we find ourselves as a country we may have to look at that option as well. It is very clear we have not been able to raise money from within our country to support our programmes, so the next option is to look for an external party [multilateral institution] to come in. This is where we find ourselves”.
“I’m sure government is looking at it, but if the decision is not taken fast it will affect their programme. Government will not be able to focus on development, and if you look at the budget…it is very clear especially item one which is emolument and salary payment. From the way it is going, we need to break that cycle by getting an assistance from outside the country and our best bet goes to our good friend the IMF which I know also comes with some constraints”, he further outlined.
Continuing, Dr. Peprah said “we have to check the productivity and the numbers at our public service; there is a kind of mismatch there. So, IMF coming in will be looking at that normality; that’s the IMF’s strategy – they will first check your wage bill – and it’s also backed by economics which states in time of distress the first thing you do is to cut your labor”
Ghana renewed its marriage with the IMF in 2015 where it sought US$918 million loan to help stabilize the economy.
Tekper calls for debt sustainability programme
Former Finance Minister, Seth Tekper, recently called for a debt sustainability programme – whether ‘Home Grown’ or ‘External’ to restructure the country’s debt.
The country’s debt has hit unsustainable levels as almost 50% of tax revenue is used to settle interest payments, whilst wages and salaries also consume a sizeable amount, leaving little space for financing capital and infrastructural projects.
Speaking at the maiden PFM Tax Dialogue Series which centered on the fiscal economy, Mr. Tekper said such a programme to streamline the country’s debt is necessary to avoid debt default.