The International Monetary Fund (IMF), has started analysing Ghana’s ability to finance its policies as well as its capacity to pay principal and interest on loans on time.
This is after a team from the IMF met with the Ministry of Finance and the Bank of Ghana (BoG) in Accra on Monday, September 26, 2022, as Ghana seeks a loan facility of up to $3 billion.
The loan is to support the Government’s Enhanced Domestic Programme, which is to help the country navigate through the current economic hardship and improve its fiscal balances sustainably.
In a statement issued in Accra on Monday, September 26, 2022, the Ministry of Finance explained that to access the loan, a prerequisite was the Debt Sustainability Analysis (DSA), which would be a “confirmation that Ghana’s debt is on a sustainable path.”
It said the Government was putting together a comprehensive post COVID-19 economic programme, which would form the basis for the IMF negotiations.
The statement said: “Government remains committed, and shall continue to actively engage all stakeholders, both public and private, in a clear and transparent manner as we seek to fast-track this process.”
Debt Sustainability Analysis is usually conducted by the IMF as part of its advice on macroeconomic policies, both in the context of IMF-supported programmes and surveillance.
Through a framework, which became operational in 2002, the analysis critically assesses a country’s ability to finance its policy objectives and service the ensuing debt without unduly large adjustments, which could otherwise compromise its stability.
When completed, the analysis would not only help the IMF in its decision to support the country’s enhanced domestic programme, but also help the financial market players to appreciate the debt position of Ghana.
Stéphane Roudet, Mission Chief for Ghana, is leading the team currently in Accra to continue discussions with Ghanaian authorities on policies and reforms that could be supported by an IMF lending arrangement.
The team will be here from September 26 – October 7, and engage with Parliament’s Finance Committee, Civil Society Organisations (CSOs), and development partners, including UNICEF and the World Bank.
Ghana, just like many other countries the world over, is experiencing economic hardship largely due to Covid-19 and the Russia-Ukraine War.
In a report by the Ghana News Agency in June, it was observed that some Ghanaians had parked their private vehicles and boarded commercial ones (trotro) to and from work while others used their private vehicles for commercial purposes, especially after work.
For instance, Madam Rosina Twumasi, a midwife at a public hospital in Accra, said: “Sometimes, I walk half of the way or quarter of the way to Achimota overhead, or at least Flat Top when going to work in the morning and then board a car just to reduce cost, else we’ll soon look older than our age with the stress…”
Professor Peter Quartey, Director of the Institute of Statistical, Social and Economic Research (ISSER), had explained that the happenings were symptomatic of inflationary pressures.
Prof Quartey, just like other Economists, therefore, urged the Government to double efforts and institute targeted policies that would transform the economy from being primarily import-dependent to a value-addition economy.
They recommended that funds be allotted to programmes like the government’s One District-One Factory (1D1F), and Planting for Food and Jobs (PFJ) to make the products export ready.
Meanwhile, the Government has promised Ghanaians a better future, saying it had put policies in place, which together with the programme with the IMF would transform the economy and make it resilient.
“We’re having an arrangement with the IMF so that we move beyond the dependence on Government and donors into our creative synergies,” the Finance Minister said recently.
Since 1957, Ghana has entered into 17 bailout arrangements with the IMF to restore the health of government finances.
Ghana exited the last IMF arrangement in April 2019.