The Information Minister, Hon Kojo Oppong Nkrumah stated that the government will ensure that the International Monetary Fund (IMF) negotiations will be in the interest of Ghanaians. The government is seeking to help address the economic challenges facing Ghana and help resuscitate the economy. But what are some of the consequences of Ghana’s government going to the IMF?
The IMF loan bailout created a lot of debate when a leading member of the New Patriotic Party, Gabby Asare Otchere-Darko, tweeted on Monday, June 27 that the government is likely to go to the IMF program. Some people believe that this loan is in Ghana’s best interest, while others believe that it will have dire consequences for our country. In this blog post, I will explore both sides of the argument and try to come to a conclusion about what this loan means for Ghana’s future.
No Unfavourable Conditions?
The first point of discussion is whether or not this loan will be good for Ghana. One reason why many people think that this loan could potentially be good for Ghana is that the IMF does not impose political conditions on its loans. The attitude of Ghanaians linking every development or predicament of the nation to politics will be cut short. They are concerned with economic stability and improving economic growth, which could ultimately benefit all citizens in the long run by leading to greater income distribution and reducing poverty rates.
However, there are also concerns about whether or not the government is negotiating on behalf of Ghana at all. The concern arises because Ghana has been to IMF sixteen times and IMF limited the government’s hiring and increasing of workers’ wages, which increased hardship for the citizenry.
Increased National Debt
It is estimated that this loan will put Ghanaians into more debt. Previous governments have not been clear about what the loan entails and how it was used. This government and previous governments have not been transparent even about the spending of our resources which is worrying. Given the high-interest rates attached to IMF loans, the country will be in more debt because previous loans acquired from other countries and institutions are yet to be paid.
If the Akufo Addo-led government does not negotiate in good faith it could have dire consequences for Ghana. These include an increase in poverty and inequality, as well as a decrease in economic growth. IMF bailout eliminates subsidies for utilities and petroleum products. The citizenry is complaining about hardship in the country even with government subsidies and we need not be told how the cost of living will be if these subsidies and reliefs are scrapped.
What the IMF Bailout Could Mean for the Cedi
Ghana has been to IMF sixteen good times and the result is that the economy of the country only grows in the first year until it is off the bailout then default settings resume. IMF programs often depreciate our currency and the cedi does not perform well against other international currencies when the country is taken off IMF initiatives. The erstwhile President Mahama administration took the country to IMF, and employment and salary increment were stopped for years which increased the unemployed rate and hardship in the country. The good people of Ghana know that there are many state agencies and spending that can be scrapped to save the country a lot of money.
All we can Do Now is to Wait and See…
The government should ensure that any negotiation with the IMF is done in Ghana’s best interests. The only way to do this is by ensuring that there is enough trained personnel at key decision-making levels. Finally, while going to the IMF might be seen as a last resort measure by some, there may also be positive aspects such as improved macroeconomic stability (e.g., lower inflation) which may improve both production and consumption patterns – provided things go according to plan! It remains to be seen whether or not the benefits outweigh the potential drawbacks. For now, all we can do is wait and see…
Overall, it is not in Ghana’s best interest to go to the IMF for a loan. This is because the terms of the loan will be unfavourable and could potentially result in dire conditions for the country. Additionally, this loan will add to Ghana’s debt stock and could have negative implications for the country’s future.
Adam Ibrahim
Adam is passionate about politics and issues that affect governance. As a writer, he channels his energies into writing on pertinent national and political issues for the good of the Ghanaian people.