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Ghana’s President Nana Akufo-Addo has defended his decision to seek help from the International Monetary Fund (IMF). He said that it was necessary to restore the public finances of the country, which was severely affected by the pandemic and the Russian invasion of Ukraine
Ghana’s President Nana Akufo-Addo has defended his decision to seek help from the International Monetary Fund (IMF). He said that it was necessary to restore the public finances of the country, which was severely affected by the pandemic and the Russian invasion of Ukraine.
The decision to seek a bailout from the IMF did not go well with civil society and the opposition parties, which maintained that it would lead to the country getting debt trapped. Ghana is in the grip of a severe economic crisis. Critics are accusing President Akufo-Addo of reneging on his initial decision not to call on the IMF to address its economic woes. Instead, he suggested imposing a new tax for mobilizing more resources. Critics also allege fiscal profligacy in the country, which the ruling party denies.
Presently, the IMF officials are in Ghana for due diligence and to help restore macroeconomic stability, preserve debt sustainability and promote inclusive and sustainable growth. The president asserted that there was no way to rescue the economy other than seeking a bailout plan from the IMF. Of course, such help comes with a lot of strings such as the country should follow an open policy of reforms, reduction of subsidies, charging user charges, etc. He stressed that world over countries presently faces acute economic woes on account of the pandemic and the ongoing Russian-Ukraine war. Ghana is not the only country that is seeking concessional finance. A good number of countries are seeking support from multilateral organizations and other funding agencies.
Ghana recorded 27% inflation in May, its highest level in two decades. It is seeking IMF assistance for the 18th time in its history. In 2015, the country obtained a loan of about one billion dollars in return for a fiscal austerity plan.
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At the end of March, the parliament voted to create a highly contested tax on electronic transactions, which imposed a social mobilisation of funds. The e-levy provided for a 1.5% tax on electronic transactions, including mobile money payments, which are widely used in the country. There was resistance to the imposition of the e-levy from many quarters and for its speedy rolling back.
