Finance Minister, Ken Ofori-Atta
Ghana to return to IMF for financial bailout – Economists predict
Ghana to face economic distress – Fitch, Bloomberg report
Parliament at an impasse over E-Levy
Economist, Dr. Dennis Nsafoah has predicted that Ghana’s current economic situation will soon compel government to return to the International Monetary Fund for financial support.
According to the Associate Professor at Niagara University in Canada, Dr. Nsafoah explained that government’s fiscal target for 2022 seems rather unrealistic with the country on the brink of returning to the IMF.
“Will the government of Ghana seek an IMF intervention? It will. It [government] may delay it, but eventually it [government] will go for it. Thinking about this situation and the most likely outcome may be at the end of the year, when it realizes it can’t achieve the revenue target,” he is quoted by Joy Business.
“The target the government has set for itself is too high, and that is when they will start talking to the IMF. But over the weekend, I had the opportunity of interacting with former Finance Minister, Seth Terkper and then he made a point that he thinks that it would even be shorter,” he added.
Dr. Nsafoah made the comments speaking at a forum organised by PFM Tax Africa to discuss Ghana’s Economic Outlook for 2022.
The Canadian-based economist further suggested that “the most prudent thing for government to do is to actually start talking to the IMF because the target they have set for themselves, it’s quite unrealistic.”
While he also believes government cannot achieve its revenue target of 42 percent for 2022, Dr Nsafoah said conversations around the 2022 budget cannot be complete without the Electronic Transactions Levy (E-Levy).
Touching on Ghana’s debt-to-Gross Domestic Product ratio, the economist predicted the country will most likely reach 83.9 percent by end of 2022.
“…But the most likely outcome by 2025, as inflation in the USA goes down and then the Federal Reserves decrease the pace at which it contracts money, things would improve”. And then we would have a debt to GDP ratio of about 73.6%”, he stressed.
Meanwhile, in recent weeks, notable organisations have predicted economic distress for Ghana, particularly this year.
The latest is that from ratings agency Fitch who recently downgraded Ghana’s long-term foreign-currency issuer default rating (IDR) to ‘B-‘ from B with a negative economic outlook.