AFTER SIXTEEN DEALS WITH THE IMF, WILL ANOTHER ONE SAVE GHANA?

In Ghana today, many a citizen feels the pinch of the general increases in prices of goods. Transport fares keep increasing as well as the price for accessing services in the country.

For the governing New Patriotic Party (NPP), the expectation of clinching a deal with the International Monetary Fund (IMF), offers a glimmer of hope as they believe this would give our economy a new lease of life.

The question topmost on my mind, however, is whether another IMF deal will save Ghana from suffering another such economic woe? My worry is premised on the fact that this will not be the first time Ghana is going to the IMF for support.

Our first stop at the IMF was on May 17, 1966 for a Standby Agreement. Subsequent agreements followed in the following years for similar support: May 25, 1967, May 28, 1968, May 29, 1969, Jan 10, 1979.

According to Twumasi-Baffuor (2019) “by 1983, Ghana’s economy was in tatters. It desperately needed support to reverse the downward spiral. As a result, Ghana embarked on a major programme of economic reform. It did this through an IMF and World Bank sponsored structural adjustment programme and economic recovery programme”. Standby Arrangement: Aug 03, 1983, Aug 27, 1984, Oct 15, 1986; Extended Credit Facility: Nov 06, 1987; Structural Adjustment Facility Commitment Nov 06, 1987 and Extended Credit Facility Nov 09, 1988.

Put together, Ghana has been to the IMF seventeen times. The last one took place on 3 April 2015, when the IMF approved a three-year Extended Credit Facility arrangement with Ghana. The programme was extended for an additional year, ending on 2 April 2019.

Former president John Dramani Mahama has proposed a raft of measures that can help put the Ghanaian economy on a better footing in his latest address Ghana's debilitating economic situation. And, I totally agree with his suggestions which are as follows:

a) Reducing the public debt, debt service obligations and creating fiscal space

1) An immediate moratorium must be placed on all non-concessional borrowing.
2) Government must actively canvass our bilateral partners for more concessional financing and grants.
3) There must be a stop to Central Bank financing of government above the 5% threshold. The current printing of money to finance
4) Government must stop collateralizing statutory funds for the purpose of taking on more loans. The wanton collateralization has been unhelpful.
5) Government should also begin work to amend the enabling legislations of some state-owned enterprises like the Ghana Cocoa Board to prohibit them from engaging in non-core, quasi-fiscal functions.
6) One of the biggest sources of suffering and difficulty for Ghanaians today, is the cost of fuel which has skyrocketed to the highest levels in our history due to the rapidly falling cedi and is affecting everything else on the market. Ghana is making huge windfalls from the sale of crude oil, royalties, tax payments, surface rentals and others. The Government can apply some of these huge windfalls to cushion consumers. In addition, other revenue handles have witnessed significant positive out-turns.

b) Cutting cost, reducing waste, and spending wisely

The National Entrepreneurship and Innovation Programme, National Employment Agency, MASLOC, Ghana Enterprises Agency and many others should be merged into one entity, under the Ministry of Employment and Labour Relations. They all have similar and overlapping functions, which the Ministry is mandated to undertake. The Special Development Initiative Secretariat and the accompanying Development Authorities must be scrapped, and their supposed functions sent back to the Metropolitan, Municipal and District Assemblies whose work they have usurped for sloganeering purposes. Local level infrastructure has always been under the purview of District Assemblies. All that is required is the timely release of their common funds and any other additional resources and they will be well placed to undertake this function effectively.

The budget of the Office of Government Machinery has ballooned over the last six years from a little over GH¢700 million to GH¢ 3.1 billion in Expenditure rationalization, to be successful, must first start in the President’s office. Substantial savings of GH¢ 1 billion or more can be made by slashing the budget of the Office of Government Machinery.

We need to introduce stricter public financial management guidelines and regulations. A tougher sanctions regime must be introduced to check the haemorrhage of over GH¢ 17 billion yearly.

RE-VISIT OPERATION FEED YOURSELF
We do enormous damage to our currency, the cedi, and our economy, when we spend billions of dollars on the importation of rice, sugar, tomato products, frozen fish, poultry, meat products and vegetable cooking oils. Yet we have more than the potential to produce here to feed ourselves
and even export. It is estimated that forex outlay for food products for which we have a comparative advantage to produce locally amounts to some $3 billion every year.
It is said that out of adversity comes opportunity. Restriction of importation of some of these products, side-by-side with increased local production, is a realistic proposition that we need to begin to consider.

There must be prioritization and strategic investment in private commercial large-scale production of these commodities. We cannot sustain progress in agricultural production based on only support for small scale producers.

Government must support large scale commercial agricultural production to achieve food self-sufficiency.

I dare say that if these measures are not heeded to, we will keeping going back to the IMF almost every four years as we have done seven times already.