Is the government’s decision to seek a bailout from the International Monetary Fund such a bad idea? I thought this was a “rescue mission” that will save our country from our economic woes. Why is the University Teachers Association of Ghana (UTAG) alarmed and issuing a warning statement to the government already?
The Association announced on Monday, July 4, that it has taken note of the government’s request for financial support from the Fund and that it will not accept any conditions from the International Monetary Fund (IMF) that will harm its members.
However, it emphasized that it would not accept any policy order from the Fund that had negative repercussions. A portion of the statement said, “We, thus, feel unhappy with the government’s decision given its possible adverse impact on UTAG members, and by extension public sector workers, and its consequence on the operations of Public Universities.
“We want to make it clear that the Ghanaian government must make sure that the terms of the support do not adversely affect the terms of service of labour unions, particularly UTAG”. The statement further said, “In particular, UTAG would not accept any IMF conditionality that adversely affected the current agreements between Government and UTAG to enhance the Conditions of Service of our members”.
Ghana requested a $918 million loan from the IMF at the beginning of 2015 to help stabilize the economy. Working with the Ghanaian government, IMF consultants created a three-part programme:
Restore Debt Stability
The government reduced hiring and pay growth and did away with utility and petroleum product subsidies. It cracked down on tax evasion and streamlined exemptions in order to increase income. Luxury car levies and higher taxes on the wealthy were two new revenue sources. The new Public Financial Management Act calls for enhanced accounting standards, practices, and technology to give Ghana’s finances a stronger foundation.
With the unemployment rates surging in the country, a cut-down on government recruitment will gravely affect the populace, especially the youth. Public sector workers, including UTAG members, will be at risk of affected livelihoods if their conditions of services must be reviewed. Maybe a reshuffling will be necessary to sift out the “unwanted” people on the government payroll.
Make Monetary Policy more Robust
The authorities decided to strengthen the inflation-targeting system and eventually stop the central bank from financing the budget deficit, which is a key cause of inflation. Will this be the best possible way to fight inflation in our current economy? Can we explore other means?
Bring the Banking System into Order
A study of the asset quality found a substantial under-capitalization. The Bank of Ghana used its newly expanded jurisdiction to close down insolvent lenders after certain banks received recapitalization. To make sure that banks adhere to sound underwriting and credit evaluation standards, the central bank enacted regulations. Additionally, it repaid the depositors of bankrupt microfinance institutions.
UTAG Unrest
We forestall these conditions arranged by the government and the IMF being replicated as the government begins engagements with the IMF on Wednesday. UTAG is not at rest because they would have preferred the government sought other domestic solutions to our economic problems rather than throwing their hands in despair at the IMF. In the statement by the UTAG, resorting to the IMF at all times was not a sustainable way to solve our economic crisis as a nation.
UTAG embarked on a nearly 3- month strike action, expressing their demand for better conditions of service. The strike was called off after the government agreed to address their concerns. Have all their concerns been met by the government? Will their expectations be met this time or they are in for a huge disappointment?
Priscilla Fumadorh
Priscilla is an entrepreneur and a creative communicator who loves to communicate through writing. She is passionate about national economic issues and does not miss a chance to offer her opinions on them for the good of the country.
Interesting piece Priscy. Well, if IMF is the way out, some people will be really affected, but not the politicians, ministers or MPs. It is therefore natural for UTAG to protect its own and in order not to sound selfish, they tried to draw attention on the negative impacts on the government workers and the unemployed.
I couldn’t agree more with you, Sylvestre. Since the politicians are obviously going to be shielded from whatever consequences of the IMF loan, it is only fitting that UTAG looks out for itself. I will not be surprised if other associations come out boldly to make their stand just as the UTAG has done.