Conditions that led to IMF bailout different from Mahama’s – Oppong Nkrumah

Govt in talks with IMF

IMF team to arrive in Ghana on Wednesday for bailout talks

Oppong Nkrumah justifies government’s decision for IMF bailout

Information Minister Kojo Nkrumah has noted that the government’s decision to seek an IMF bailout was borne out of circumstances that are different from what caused the erstwhile Mahama administration to do the

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He stated that Ghana’s current economic crisis was brought about by external factors, not from domestic economic mismanagement as has been suggested by the opposition.

“When you self-induced crisis and then you have to go to the Fund for a balance of payment support program, then it raises questions about the way you are managing fiscal policy, monetary policy, and the broader economy.

“But this is not a situation in which you have a self-induced crisis. This is a different scenario altogether. It is not about your domestic economic management; it is about an international crisis-induced phenomenon that has now brought you to a point where your buffers have been eroded and you need to respond.

The information minister justified the government’s move to seek an IMF bailout by noting that several countries have gone to the fund since 2020 when the COVID-19 pandemic struck.

“That is why for example, from 2020, about half of the world’s countries are applying to the Fund for some support. It is not to say that all of the people who manage all of these over one hundred economies do not know how to go about their jobs but is it evidence of the fact that something external, something exogenous has hit, that is why today, Egypt, Kenya, I understand Tunisia is also applying for some sort of support, are asking for support.”

Oppong Nkrumah continued while explaining the government’s reasons for seeking an IMF bailout.

He said “The reasons that have brought us here are quite clear.

“If you look at the performance of Ghana’s economy between 2017 and 2019, yes there were still some structural challenges in Ghana’s economy but the economy was performing way better based on, particularly, the fiscal and monetary policy measures and the broader economic policy measures that the administration was rolling out.

“The results were that we were doing better, the inflation rate was going down, interest rates were going down, we were having the opportunity to create some more jobs and some more development programs in the economy. In 2020, that stopped, primarily because our economy still with its challenges, was hit by a major external factor, not just our economy, but many economies around the world. In 2021, we started a path to recovery, so you will notice that in 2021 even though we had depleted a good chunk of our buffers and our reserves, we were still now building back better, trying to rebuild our reserves, and trying to get our economy back on track.

“Then, the first part of 2022, I think in February, you had what occurred in the Black Sea area, giving the world another major crisis. Now there are high food prices all over the world, high fuel prices, and high cost of financing and it is biting Ghanaians a lot.

“Do you have the domestic buffers still to respond to them? You don’t. You are now just trying to recover and rebuild and so if you look at all your options, despite the initial thinking that you could rebuild those buffers domestically, the president has decided that it is important we start engaging with the Fund for the possibility of getting a balance of payment support from them. To help us rebuild our buffers and better mitigate what is happening around the world and happening here in Ghana as well.”

President Akufo-Addo ordered the finance minister to begin formal engagements with the International Monetary Fund on financing for a government program.

Meanwhile, a team from the International Monetary Fund is expected to arrive in Ghana on Wednesday, July 6, 2022, to commence negotiations with the Government of Ghana on the modalities for a package to support Ghana’s economy.

SSD