News Guide Africa

Tag: IMF Bailout

  • Industrializing the Ghanaian economy is more sustainable

    Industrializing the Ghanaian economy is more sustainable

    Adnan Adams Mohammed

    As government of Ghana looks for sustainable way to manage its debt, it has been urged to strengthen its industrialization policies.

    An economist believes that, as Ghana moves to negotiate with China for debt forgiveness, the debt stressed country needs proactively to industrialize the economy in order to withstand external economic shocks.

    Ghana’s economy suffered the shocks of COVID-19 and the Russian-Ukranian war as well as the skyrocketed petroleum price on the world market coupled with over-borrowing and mismanagement of public funds. These had a toll on the local currency, which depreciated more than 50 percent last year to the major international trading currencies with inflation breaking all time records in more than two decades to peak around 54 percent. These have led the country to restructure its debt which has crossed 100 percent of Gross Domestic Product (GDP). However, the economist diffused perceptions that China may seize the opportunity to take over the local industries if the negotiations are successful.

    “Do we as a local economy immediately have capacity to produce the things that we ordinarily import from China?”, An economist and currency analyst at GCB Capital Limited Courage Boti said. “Our industrialization policies are not up and running. So I don’t see what China will demand from us differently from what we have in place”, he added.

    The Finance Minister, Ken Ofori-Atta, last week disclosed that, as part of government’s effort for external debt relief, its planned high-level meeting with Chinese creditors over Ghana’s debt restructuring which has been postponed to late March 2023.

    Meanwhile, Economist Courage Boti argued that the perception of importation of inferior goods from China is subjected to the purchasing power of the importers.

    “In a bargain, concessions must be made .I think at this point in time the most pressing issue is that our debt is not sustainable and we must find a way to return it to sustainable path. Negotiating with them will mean that we’re trying to get them on our side so that they could cooperate with debt restructuring,” he said.

    “The question is, it will come at what cost? Will it mean dampening of Chinese goods?,” He quizzed.

    Again the Chinese goods on our markets: the quality argument and associated perceptions, our traders decide what they bring in and so the quality we talk about are determined by what we are willing to buy,” he stated.

  • Ghana-IMF Deal: A week of highlights of soonest hope amidst skepticism

    Ghana-IMF Deal: A week of highlights of soonest hope amidst skepticism

    Adnan Adams Mohammed

    The Balance Of Payment support sought by Ghana Government from the International Monetary Fund (IMF), last week, received massive attention from the key negotiators which shines brighter light of concluding the deal soonest.

    Earlier in the week, the Managing Director of the Fund assured the President of Ghana that, the  deal would be finalized before the end of the year.

    The IMF boss gave the assurance during a closed-door meeting with President Nana Akufo-Addo, last week on the sidelines of the Africa Adaptation Summit, in Rotterdam, Netherlands. President Akufo-Addo indicated to the IMF boss that, a lot of work has been done by Cabinet and the Ministry of Finance, and the document to be presented by the Ghana side “is ready for the scrutiny of the IMF.”

    “We understand the urgency, and we will move as quickly as possible”, Kristalina Georgieva said. Describing Ghana as a “superb country”, she reiterated the determination of the Fund to work with Government and the Ministry of Finance, to ensure that an agreement is in place before the end of the year.

    Last week after the Kristalina-AkufoAddo meeting, the new Mission Chief of IMF for Ghana, Stéphane Roudet, paid a courtesy call on the Minister for Finance, Ken Ofori Atta and the first Deputy Governor of the Bank of Ghana, Dr. Maxwell Opoku Afari as well as heads of other key governmental institutions.

    His visit sets the tone for a full negotiation to begin with the Government of Ghana.

    Despite the soaring hope, some economists are skeptical about the parties reaching a deal before end of the year.

    A Financial Economist, Professor Lord Mensah, is skeptical about reaching a deal with the IMFin the last quarter of this year.

    “We’re almost through the last quarter of the year, so if we get the program with the IMF now, the fiscal impact will not be as effective as expected. I believe that the IMF will want to take the new year into consideration, and some of the policies they’ll like to roll with us will be reflected in the budget that will be read in November. So they may be using this period till the end of the year to draft the possible policies,” he said in an interview while reacting to the IMF Boss comment.

    “This also shows how prepared the country was for the IMF, and everything signals that we were not ready. That is why we’ve been going up and down with them. I believe they want to match up some of their policies to go with our fiscal year”.

    Ghana is before the IMF for US$3 billion to help the country navigate through the hostile economic crisis it finds itself in as a result of the adverse effects of the coronavirus pandemic and the ongoing conflict between Russia and Ukraine.

    IMF officials are expected back in the country in the last week of September to open formal negotiations.