Increased global crisis pushes Ghana to IMF for support

The Minister of Information, Kojo Oppong Nkrumah, says the intense global twin crisis of COVID-19 and the geo-political tension between Russia and Ukraine have left the country in dire economic condition, compelling government to seek support from the International Monetary Fund (IMF).

The government’s decision to engage the IMF for a possible bail out, he said, followed a Cabinet decision last Thursday.

A statement issued by the Information Minister on Friday disclosed that President Akufo-Addo engaged the IMF Managing Director, Dr. Kristalian Georgieva, on the country’s decision to apply for the Fund’s support.

The statement added that he had formally authorised the Finance Minister to commence formal engagements with the IMF to support the government’s economic programme.

The statement noted that the engagement with the IMF would seek to provide a balance of payment support, “as part of a broader effort to quicken the country’s build back in the face of challenges induced by the COVID-19 pandemic and, recently, the Russia-Ukraine crisis”.

“This will be the 17th time the country will be seeking the IMF support. The country is a member of the IMF, and had recently received $1 billion for its COVID-19 response programme. Government expects the IMF support to boost its funding sources needed to execute its economic programme. It is expected that capital markets and friendly sovereign countries may also contribute to the programme,” the statement explained.

Externally-induced

In an interview with the media over the weekend, the Information Minister said while Ghana was rebuilding its buffers and reserves after the fight against COVID-19, the war in Europe had worsened the plight of the nation.

He said the development was not domestically induced, but rather an externally induced crisis, reiterating that “the country has been negatively impacted by the twin effects of the COVID-19 pandemic and the Russia-Ukraine war”.

This ugly development, he noted, had been aggravated by the adverse implication of global supply chain disruptions, causing Ghana’s economy to be in distress.

The Minister explained that for government to be able to respond appropriately, there was the need to tap into the cheapest and easily available option for mitigating these crisis, which is going for an IMF support. “This has become even more important as domestic measures to contain the impact of the second crisis on the country’s fiscals are yet to yield optimal results,” the Minister added.

He further assured Ghanaians of the government’s commitment to safeguarding the country’s interest, as far as negotiations with IMF are concerned, emphasising that “NPP government has a proven track record of putting Ghana first, and will do anything it takes to ensure that the country does not fall short in its negotiations with the IMF”.

Before onslaught

According to him, prior to the onslaught of the crisis, the country had witnessed an average annual Gross Domestic Product (GDP) growth rate of seven per cent in 2017, 2018, 2019 and part of 2020.

“This was when the economy was then generally acknowledged as one of the fastest growing in the world. Then came the COVID-19 pandemic that slowed the country’s economic momentum. The country made a gradual rebound with a good economic outlook in 2021 in the short to medium term, contingent on an increase in demand for Ghana’s exports, improved business confidence, and successful implementation of the Ghana COVID–19 Alleviation and Revitalisation of Enterprise Support programme. Ghana ended 2021 with 5.4 per cent in growth,” he elaborated.

The Minister, however, said the Russia-Ukraine war further derailed the country’s growth, causing unfavorable increases in fuel prices, shortage of fertiliser and essential agro-processing inputs with its associated inflationary pressures.

“Ghana is not the only African country seeking support from the IMF on the back of the adverse impact of COVID-19 on the global economy. Other countries that have gone for support include Kenya, Egypt, Cote D’Ivoire, Ethiopia and Morocco, among others,” he mentioned.

Calm down

Meanwhile, the Minister of Food and Agriculture, Dr Owusu Afriyie Akoto, says Ghanaians will soon praise the NPP government for engaging the IMF to support its economic programmes.

“Dear Ghanaians, I am calling for calm with the belief that the IMF conditionalities will be favourable to all Ghanaians. Ghanaians should calm down, and wait for the terms that will come out of our engagement with the IMF, and they will realize it will be favourable for the people of this country,” he said in a radio interview.

The Agric Minister further stated that the grounds on which the previous administration went to the IMF is far different from the current situation.

“There have been two unprecedented historical events in the last two years, one of which is global COVID-19. Since 1919, there has never been a global outbreak of a disease of that nature, and we suffered that. Then we had this European war, which has never happened since 1939, disrupting everything in the country,” he lamented.