By: Prof. John Gatsi
Generally, countries opt for an IMF program when the economy is under economic and financial distress with the aim of achieving stability.
The pandemic provided Ghana with opportunities and challenges. There has been expanded expenditure but also quicker access to resources. Weak prioritization of the use of abundant supply of funds created huge fiscal gap . Election related expenditure , travel expenses and National cathedral expenses did not indicate the country was really in distress. Unexplained high borrowing beyond unsustainable levels , entangled the inbuilt resilience of the economy as interest payment burden undermine fiscal prudence. Policy credibility and confidence have been compromised and mutilated .
In 2001, NPP government engaged the IMF for the HIPC Initiative , inherited and extended an IMF program from 2017 to 2019. In 2022 an NPP government has officially requested for an IMF program for the restoration of policy credibility and confidence .
In terms of expenditure and funds related to Covid-19 , Ghana experienced positive net benefits as the funds raised were more than the expenditure incurred. So if the fresh and ongoing engagement with the IMF is pandemic induced, then it is pandemic mismanagement.
The intention of government to engage the IMF is to stabilize the economy and learn some basic lessons of prudence and productive expenditure.
All the statements made against going to IMF including only lazy governments go to the IMF and the global economy is in distress cannot change the fact that Ghana has opted for an IMF program.
Though we have global economic challenges , not all countries are going to the IMF due to the pandemic and Russia- Ukraine war. If you are going to the IMF it must be related to the way the pandemic has been managed. Global economic developments are always contributors to economic instabilities that direct countries to the IMF , be it international crude breakdowns, droughts,global financial meltdown, global commodity price collapse etc.
