Ghana at the IMF
A bland statement last week under the signature of the Minister of Communications, Dr Edward Omane-Boamah, that the President has directed that the country approach the International Monetary Fund (IMF) for help in finding solutions to the country’s economic problems has generated extremely negative reactions from some of us and their (IMF’s) faithful allies in the chattering classes.
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Several, usually unrelated factors, have come together to persuade the critics of this policy shift to pursue their unending hobby of perpetual naysaying.
It should be obvious to all of us that when things are hard, as they surely are, asking for help should rather be an occasion for taking deep breaths of agreement that something substantial at last, is being done.
And going ahead to put oneself in a position to assist by word or deed, the measures that need be taken to take all of us out of the woods in the shortest possible time.
However, we are being assailed and bombed daily with heavy political ordnance that this step is only a pitiful and retrograde instance of incompetence at all levels of governance in this country.
Policy Shift
Strangely enough, the policy shift from home-grown solutions to foreign IMF assistance is at the same time, taken as proof of the unparalleled sagacity of Dr Bawumia, who had predicted that the government would have to resort to an IMF bailout sooner or later, as far as he could see, from his analysis of the economy and its management by the government. He said this in March this year, and readers of this column may recall I actually took him on after his lecture.
How then, could a decision predicted months earlier by a leading critic of economic policy in the country, lead to such cold reception by the self-same critics when it is at last adopted? Of course, it would be foolish to say Dr Bawumia and his supporters did not themselves believe in the medicine they were prescribing for us all.
That would imply his diagnosis was seriously flawed, or tailored to certain unpalatable political ends. It could also mean he and his friends really did not believe the government would see things the way he saw them, and do what he had prescribed.
Either way does not really explain the cold, insulting reception this IMF direction has so far received from people who normally should have rejoiced that at last, a concrete suggestion from them has been adopted by government within the time frame they predicted.
I will attempt to answer this conundrum my own way in this column today. That answer can be summed up in one phrase; a credible message and a credible messenger for the December 2016 general election. But before then, some background would suffice.
Ghana has been a member of the IMF and the World Bank since independence. We have sought assistance from them to support our budgets and to undertake specific projects from time to time. The problem in this country, and I must say, in some other countries around the world, is that going to the IMF for assistance has come to be seen as an ideological issue, supported usually by the rightists in the polity and strenuously opposed by the leftists.
Devaluation
An important feature of budgetary assistance to correct imbalances and strengthen the local currency has been devaluation. For decades, the word devaluation has been regarded as a virtual swear word of the potent Antoa or Memeneda varieties in our politics.
The 44 per cent devaluation of the cedi in December 1971, as a precursor to approaching the IMF for help, led directly to the Acheampong coup a month later the following year, ushering in 18 years of military rule right up to the return to civilian rule in January 1993.
The collapse of the civilian Limann interregnum of the Third Republic could also be understood as an example of the refusal to engage with international financial institutions by the people of this country.
It was an anti-devaluation politician, then Chairman Rawlings, who in 1983, took the bull by the horns, and went the full hog in comprehensively adopting and carrying through a stringent reform process, the Economic Recovery Programme, and associated ancillary programmes.
It must be obvious to all today that that was a necessary journey we all took to wean us away from unproductive ideological wranglings whilst our economy faltered. President Rawlings was the Paul in our politics who had been transformed from the Saul of the fruitless ideological battles of yesteryear over the right thing to do to put the economy on an even keel of stability.
Strange spectacle
In short, and amazingly, we have now in this country, the strange spectacle of the normal ideological friends of the IMF and other institutions leading the charge against dealing with the IMF today, even when they themselves have prescribed it as the way to restore the economy less than five months after that prescription.
Even more surprising is the absolute refusal to heed the words of the IMF President, Christine Lagarde, that the institution has stopped attaching the harsh conditionalities it used to, seeing that growing prosperity in assisted countries has spawned unique problems unforeseen by the fund in its earlier years.
This brings me directly to the unique features of our economy which directly reflect a growing economy matched boot for boot by the expanding political appetite of Ghanaians for the goodies of governance.
All the statutory funds which have not been fully satisfied are the direct result of constitutional rule and the social legislation flowing therefrom. How soon some of us forget that by a presidential edict on his last day in office, President Kufuor saddled all of us with the now almost-ruinous single spine pay structure? How much of judgement debts were paid when we were under military rule?
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My point here is that, our successes in the past have increased expectations even as not much has been developed all this while in the areas of local production, taxation and a productive cost-effective labour force.
France, Britain and several other developed countries have in the past gone to the IMF, even as they continued their bilateral assistance to us at the time they went. If our current forays into the feared corridors of the IMF compel us to begin real restructuring of the economy, then we would have cured ourselves of our baseless apprehensions about going to the IMF, just as surely as Jerry Rawlings defanged the power of devaluation to hamstring our government.