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Industry wants say in IMF negotiations

BY: Maclean Kwofi
Dr Humphrey Ayim-Darke

THE Association of Ghana Industries (AGI) has expressed readiness to partner the government to negotiate a good deal with the International Monetary Fund (IMF) to help accelerate the recovery of the country’s economy.

The association maintained that it was imperative for the government to attach a key sector such as industry to its negotiation team in the discussions with the Breton Woode Institution.

Involving industry in the negotiation will beef-up Ghana’s team as the country engages the IMF to fashion out the best possible solutions to the challenges facing the economy, the advocacy body explained.

It also advised the government to prioritise industry and agricultural sectors of the economy in the upcoming programme meant to anchor the balance of payment (BOP) position and tackle the rising debt situation.

Strong recommendation

The President of the AGI, Dr Humphrey Ayim-Darke, who made the call in an interview with the Graphic Business at the launch of fifth edition of the Ghana Industrial Summit and Exhibition in Accra on July 27, observed that the industrial and agricultural sectors of the economy held the potential to hasten the recovery of the economy on a more sustainable basis.

“Our strong recommendation is that, in engaging the IMF, we should pay maximum attention to the industrial and agricultural sectors, to hasten the recovery of our economy on a more sustainable basis.”

“Part of the reason we are struggling with our economy today could be attributed to our heavy import dependency; and therefore, supporting our productive sectors will be most essential,” the AGI president said.

He said Ghana's economy was struggling because of the heavy dependence on imports and, therefore, investments in the productive sectors to provide the country's essential needs was imperative for the structural transformation of the economy.

He lauded the government's effort to restore macroeconomic stability in the mid-year budget and called for more engagements on ways to bring relief to businesses.

GUTA’s position

The President of the Ghana Union of Traders Association (GUTA), Dr Joseph Obeng, said the government must present a solid plan to meet the IMF in order to negotiate a programme that would not bring hardships to businesses and the citizenry in general.

He said GUTA also expected the government to negotiate for a short-term programme so that it could put its house in order and design homemade solutions to accelerate the development of the country’s economy.

“If the current managers of the economy think we should seek support from the IMF, perhaps they have seen something we have not seen yet and for that reason we have no other option than to support and wait for the full details of the negotiation between the Minister of Finance and the fund,” he said.

The context

The President, Nana Addo Dankwa Akufo-Addo, on July 1 this year directed the Finance Minister, Ken Ofori-Atta, to open discussions with the IMF towards securing a programme to support the economy.

It followed the emergence of the COVID-19 pandemic and the Russia/Ukraine war, which worsened the country’s pre-existing economic challenges, resulting in increased debt accumulation, rising inflation, a weakening cedi and the depletion of international reserves.

A credit downgrade earlier this year also led to the country being denied access to the international capital market for borrowing, at a time when domestic revenue mobilisation had weakened.

Following the directive, an IMF Team, led by its Mission Chief, Carlo Sdralevich, arrived in the country on July 5, and held discussions with the government with the hope of gathering sufficient data for negotiations to begin.

Since independence, the country has resorted to IMF support 17 times, the most recent being a $918-million facility that ended in 2019.

In 2020, the fund also supported the government with a $1-billion free unconditional loan to quicken the economy’s recovery from the COVID-19 pandemic.