Ghana’s return to IMF due to non-completion of structural reforms in 2015 programme – Bright Simmons
“It’s for unfinished business, Ghana went to the IMF in 2015 due to the fall in commodity prices and other pressures and had a 3 year programme within which certain reforms needed to be done by the end of the programme, but those reforms weren’t completed because the new government was adamant that it had to leave the programme and it did,”
Vice President of Think Tank, IMANI Africa, Bright Simmons, has said Ghana’s return to the IMF for a programme, is due to the former’s early exit from a 2015 Fund programme as well as the non-completion of certain structural reforms that had to take place during the 2015 IMF Programme.
According to Mr Simmons, the country’s return to the Bretton Wood Institution is an indication of the “unfinished business” the country had with the Fund when it adamantly insisted on leaving the Fund programme in 2015.
“It’s for unfinished business, Ghana went to the IMF in 2015 due to the fall in commodity prices and other pressures and had a 3 year programme within which certain reforms needed to be done by the end of the programme, but those reforms weren’t completed because the new government was adamant that it had to leave the programme and it did,” he stated speaking in an interview with BBC’s Peter Okwoche.
According to Mr Simmons, Ghana’s return to the IMF has been due to the fact that the government has failed to get the private market to fund its way out of the present economic troubles.
He asserts that, government has talked with syndicates of banks and tried to borrow locally at significant interest rates, but investors at a point decided to no longer lend to the government as it wasn’t using the borrowed funds to address issues with the economy to make it more creditworthy.
“Ghana has been trying to get the private market to fund its way out of this trouble, the government has talked with syndicates of banks and tried to borrow locally at significant interest rates but it has gotten to the point where investors are saying that we don’t think you can pay us back because you are not using the money we are lending to address issues with your economy that will put you in a position that you are more credit worthy than you are, you are only spending it on debt falling due, paying civil servants, making good on liabilities that have fallen due and that is not the kind of debt that is likely sustainable,” he said.
Speaking further in the interview, Mr Simmons noted that the government’s return to the Fund is an admission of failure, given that they consistently linked being with and going to the IMF with mismanagement of the economy.
“This government consistently linked going to the IMF with mismanagement of the economy and bad economy, so it became very difficult for them to go to the IMF as politically they had raised the stakes of going to the IMF to the level where any u-turn could be interpreted as failure.
“And this was mainly because of the way they framed the challenges rather than framing the situation as one involving historical reforming structures of the economy which has been going on for decades now. But instead, they created the impression that the country had made a great shift in that direction and all that we were facing are some headwinds from the global picture being Covid and Russia,” he remarked.
On July 1, 2022, President Akufo-Addo authorised the Minister for Finance, Ken Ofori-Atta, to commence formal engagements with the International Monetary Fund (IMF).
A statement signed by the Information Minister, Kojo Oppong Nkrumah, said the president’s directive to the Finance Minister followed a telephone conservation between President Akufo-Addo and the IMF managing director, Kristalina Georgieva, conveying Ghana’s decision to engage with the Fund.
“The engagement with the IMF will seek to provide balance-of-payments support as part of a broader effort to quicken Ghana’s build-back in the face of challenges induced by the COVID-19 pandemic and, recently, the Russia-Ukraine crises,” the statement read.