IMF programme: We neglected the rules of economic management - Chartered Economist

Dean of the University of Cape Coast Business School and Chartered Economist, Professor John Gertchie Gatsi, has stated that government’s call for aid from the International Monetary Fund(IMF) cannot be regarded as a lazy man’s approach but rather the failure to manage our economy prudently.

In an interview on eTV Ghana’s “Fact Sheet”, Prof John Gatsiindicated that being mindful of the country’s debt rate and interest payment could have prevented the country’s economy from crisis.

According to him, despite how logically sound to receive help from the IMF, such programmes have limitations to sustain the strength of the Central Bank.

“All the aspects of fiscal and economic management has certain rules that you need to follow and the question is whether we have followed the rules over the years. Debt has a certain level that we should contain and interest payment has a certain level that the economy can contain without any derailment but where you’re managing the economy is such a way that you’re not mindful of these rules it will lead to where we are now. Even the support from the central bank, there’s a limit to that in a regulatory contest so if you go beyond that you weaken the central bank,” he indicated.

“So if the central bank is excessively supporting government in terms of providing funding, we’ll get to a situation which we call fiscal dominance and that will weaken the strength of the Central Bank and ensure that monetary policy tools that we are chaining out will not become effective. It’s just a cycle, respect the rules you’ll remain strong and robust but if you don’t respect the rules with time it will catch up on you and that is what has happened to us,” he explained.

Professor John Gatsi further disclosed that the Akufo-Addo led administration has also been inconsistent and untruthful with reporting fiscal deficits gradually leading to the country’s economic flaws.”

“Even reporting of economic data is another issue that has led us to this point. We recall that in 2019, the budget of government of Ghana stated that we had positive primary balance. We also recorded 4.7% deficit but when government wanted to go to the IMF for the 1billion to cater for the Covid expenses we saw gov’t reporting 7.7% deficit, a negative primary balance,” he added.

Ghana is however expected to receive as much as $1.5 billion To strengthen its finances and regain access to international capital markets, Ghana may ask the International Monetary Fund for

The second-largest producer of cocoa and gold on the continent changed its policy from not requesting aid from the multilateral lender as the prospects for the global economy deteriorated. Hours before negotiations with the IMF began in the nation’s capital, Accra, finance minister Ken Ofori-Atta said in a phone interview that the exact loan amount will be decided following the first assessments.