- July 12, 2022
- Posted by: Amos Ekow Coffie
- Categories: Banking and Finance, Economics
The decision by the Government of Ghana to seek an International Monetary Fund (IMF) intervention is apt, former Chief Executive Officer of Stanbic Bank Ghana, Dr. Alhassan Andani, has said.
He explained that in every economic establishment, one will get to a point where expenditure exceeds the income generation. Therefore, there will be the need to bridge the gap by resorting to a lender.
That is exactly what Ghana has done by heading to the Fund for a possible programme, he said.
“I think it is the most appropriate thing to do, the IMF, in the finances of nations, is more or less the lender of last resort and every economic entity, individual, companies in dealing their financials, you get to a point where your expenditure exceeds your income and therefore you need to go to your lender to discus how to bridge the the gap.
“At the point where we are in Ghana clearly, all of the programmes the government is prosecuting has positioned the country where the total expenditure outflow exceeds the income and income in this case, taxes and all other receivables that the government has. There is a big gap and therefore, [government] has the right and indeed, the responsibility to go to a lender of last resort which is the IMF. So I think it is the right thing to do.” he added.
Regarding the government’s decision to seek this support, a Senior Fellow at the Africa Centre for Economic Transformation (ACET), Dr John Asafu-Adjaye, said investor confidence in Ghana’s economy dipped due to the downgrade by international credit rating agencies hence, it makes sense to go to the IMF to rebuild that confidence,
Dr Asafu-Adjaye said the decision by the government to head to the IMF did not come as a surprise to him given the challenges that saddled the economy recently.
“Personally, I wasn’t surprised because given the sovereign rating downgrade, that Ghana suffered, Ghana is not able to to go into the capital market , investors confidence had gone down, capital flight. So I thought that going to the IMF makes sense in terms of restoring investor confidence,” he said during the 3businesscolloquium organized by Media General on Wednesday July 6.
The IMF staff team, led by Carlo Sdralevich, mission chief for Ghana, is in Ghana for initial discussions with the Ghanaian authorities about a possible IMF-supported programme.
Mr. Sdralevich in a statement said “On the basis of a request from the Ghanaian authorities, an IMF staff team will in the coming days kick-start discussions on a possible program to support Ghana’s homegrown economic policies. We are at an early stage in the process, given that detailed discussions are yet to take place.”
“The IMF stands ready to assist Ghana to restore macroeconomic stability, safeguard debt sustainability, and promote inclusive and sustainable growth, and address the impact of the war in Ukraine and the lingering pandemic.”
“We are looking forward to our engagement with the authorities in Accra,” the Fund said.
The Government of Ghana on Friday July 1 announced that it was seeking support from the IMF.
This followed a telephone conversation between the President and the IMF Managing Director, Miss Kristalina Georgieva, conveying Ghana’s decision to engage with the Fund, a statement by the Ministry of Information said.