Dean of the School of Finance at the University of Cape-Coast, Prof. John Gatsi, has dismissed the tired excuse that Ghana’s resort to a bailout from the IMF is the fault of COVID-19 and the Russia/Ukraine war.
In a write-up following the government’s announcement of the decision to return to the Fund, Prof. Gatsi pointed out that the cause of the resort is mismanagement since COVID-19 was not only a challenge, it also presented opportunities, including making it easier to access funds.
“Generally, countries opt for an IMF program when the economy is under economic and financial distress with the aim of achieving stability. The pandemic provided Ghana with opportunities and challenges. There has been expanded expenditure but also quick access to resources,” he wrote.
The government announced on July 1 that it is going for a programme with the IMF after postponing the inevitable for months leading to a mess in the economy.
To save face, the Akufo-Addo government has been blaming the Russia/Ukraine war, but especially, COVID-19 for the poor state of the economy that has pushed the country into the clutches of the IMF.
However, as Professor John Gatsi points out: “Though we have global economic challenges, not all countries are going to the IMF due to the pandemic and Russia- Ukraine war. If you are going to the IMF it must be related to the way the pandemic has been managed.”
The Akufo-Addo government’s belated decision to go to the IMF for a bailout has been unnecessarily delayed and the consequence is that the delayed inevitable bailout will take longer to kick-start.
This is according to Honorary Vice President at IMANI Ghana, Mr. Bright Simons.
“Ghana waited too long to go to the IMF. IMF doesn’t like basket cases. Ghana stubbornly refused to sign on to the DSSI. IMF will insist. It will take weeks to get an IMF staff agreement. Then the IMF Board has to agree,” Mr Simons noted.
The DSSI Mr Simons refers to is the IMF and the World Bank’s Debt Service Suspension Initiative. The initiative was packaged to help poor countries deal with the recession that the impact of COVID-19 could cause.
At the start of the pandemic, the World Bank and the International Monetary Fund urged the G20 to set up the DSSI. Established in May 2020, the DSSI helped countries concentrate their resources on fighting the pandemic and safeguarding the lives and livelihoods of millions of the most vulnerable people. Forty-eight out of 73 eligible countries participated in the initiative before it expired at the end of December 2021.
Meanwhile, the former Deputy Minister of Finance, Dr. Casiel Ato Forson, has added his voice to the reality check, that the Akufo-Addo government’s decision to go to IMF for a bailout does not mean the country is straight away ushering itself into a solution.
In a post on Facebook, he points out that because of the debilitation that the government’s delay has caused the economy, it is going to take months, or even years for the Fund to negotiate in place a program before it can start implementation.