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Exiting IMF completely dangerous – Terkper

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Adnan Adams Mohammed
The government has been cautioned by some financial experts and economists to rethink about the decision to opt out completely from the International Monetary Fund(IMF) programme which is scheduled to end by April 2019.

According to them, Ghana is a member of the IMF and must continue to remain part of the Fund’s programme to avoid fiscal indiscipline that has tendency to send the country into financial crisis.

Former Finance Minister Seth Terkper, speaking at the Citi Business Festival dubbed “Economic Outlook” said, exiting the programme completely could lead to government overspending in subsequent years.

He observed that some African countries have tested the system under the Policy Support Instrument of the IMF and it has enhanced fiscal discipline.

“I have expressed this views before and it’s been published. I believe rather than exit completely, we should take advantage of the policy support instruments of the programme which is what Kenya, Rwanda and other African middle income countries have with the IMF and that will afford us a smooth transition,” he stressed.

He cautioned that the signals sent by the current government on its desire to quickly exit the programme when it is over gives an impression that the country wants to go back to the previous activities that have constantly taken Ghana back to the fund.

He pointed out that it is important to look at the past interactions with the fund to inform government on how it will proceed going forward.

“Our affiliation with the IMF and the multilaterals span 1985 to 2000s and you can see that is was when our economic relations with the multilaterals including the World Bank, African Development Bank seriously started”

Ghana entered into an extended credit facility with the IMF for economic assistance in 2015.The deal came with  total funding support of US$918 million to be disbursed under eight tranches.

Under the agreement, government was expected to implement some policy initiatives such as freeze of public sector employment, reduction of budget deficit, and zero financing of the budget deficit by the Bank of Ghana.

The former Finance Minister argued that, the period between 2000 and 2010 could be described as rapid expansion in services and in construction, when services overtook agriculture as the largest share of Ghana’s GDP.

Mr. Terkper stated that the country’s relationship with the IMF and the multilaterals have proved positive with some policies that have propelled economic growth and development.

On his part,  Deputy Minister of Finance, Charles Adu Boahene who was part of a panel discussion said government is putting in measures to sustain fiscal stability after the country exits the IMF programme.

He assured that government is keen on reducing the fiscal deficit below 5 percent to avoid slippages.

Meanwhile, the President of the Private Enterprise Federation, Nana Osei Bonsu was of the view that the program has brought some hardship as government was constrained from spending to expand the economy.

The panel at the forum was made up of Deputy Finance Minister, Charles Adu Boahene, former Finance Minister, Seth Terkper, Head of Research at the Trades Union Congress Kwabena Otoo, CEO of the Private Enterprise Federation Nana Osei Bonsu as well as the Head of the Economics Department at the University of Ghana, Prof. Peter Quartey.

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