- July 4, 2022
- Posted by: Amos Ekow Coffie
- Categories: Banking and Finance, Economics
The conditions that have compelled the Akufo-Addo administration to go to the International Monetary Fund (IMF) for support are completely different from the situation that existed previously when Ghana went to the Fund in 2014/15, Information Minister Kojo Oppong Nkrumah, has said.
He explained that it is not about the domestic economic management rather, it is about an international crisis-induced phenomena that has brought over one hundred countries including Ghana, to a point where their buffers have been eroded and they need to respond.
When asked for his views on claims that critics are taunting the government for running to the Bretton Woods institution due to how the New Patriotic Party (NPP) also behaved when in opposition at the time the John Mahama administration went to the IMF for support, Mr Oppong Nkrumah who is also lawmaker for Ofoase Ayirebi told TV3’s Paa Kwesi Asare Asare in interview that “When you self-induced crisis and then you have to go to the Fund for a balance of payment support programme, then it raises questions about the way you are managing fiscal policy, monetary policy and the broader economy.
“But this is not a situation in which you have a self-induced crisis. This is a different scenario all together. It is not about your domestic economic management, it is about an international crisis-induced phenomena that has now brought you to a point where your buffers have been eroded and you need to respond.
“That is why for example, from 2020, about half of the world’s countries are applying to the Fund for some support. It is not to say that all of the people who manage all of these over one hundred economies do not know how to go about their jobs but is it evident of the fact that something external, something exogenous has hit, that is why today, Egypt, Kenya, I understand Tunisia is also applying for some sort of support, are asking for support.”
Asked again whether the government has been embarrassed by this decision, he answered that “The reasons that have brought us here are quite clear.
“If you look at the performance of Ghana’s economy between 2017 and 2019, yes there were still some structural challenges in Ghana’s economy but the economy was performing way better based on, particularly, the fiscal and monetary policy measures and the broader economic policy measures that the administration was rolling out.
“The results were that we were doing better , inflation rate was going down , interest rates were going down , we were having the opportunity to create some more jobs and some more development programmes in the economy. In 2020 ,that stopped, primarily because our economy still with its challenges, was hit by major external factor, not just our economy, many economies around the world. In 2021, we started a path to recovery, so you will notice that in 2021 even though we had depleted a good chunk of our buffers and our reserves , we were still now building back better, trying to rebuild our reserves and trying to get our economy back on track.
“Then, the first part of 2022, I think in February, you had what occurred in the Black Sea area, giving the world another major crisis. Now there is high food prices all over the world , high fuel prices , high cost of financing and it is biting Ghanaian a lot.
“Do you have the domestic buffers still to respond to them? You don’t. You are now just trying to recover and rebuild and so if you look at all your options, despite the initial thinking that you could rebuild those buffers domestically, the president has decided that it is important we start engaging with the Fund for the possibility of getting a balance of payment support from them. To help us rebuild our buffers and better mitigate what is happening around the world and happening here in Ghana as well.”
On Friday July 1 President Akufo-Addo gave instruction to Mr Ofori-Atta to commence the engagements with the IMF following a telephone conversation between the President and the IMF Managing Director, Miss Kristalina Georgieva, conveying Ghana’s decision to engage with the Fund.
The Ministry of Information announced this in a statement.