Govt, IMF meeting must yield right results to turn economy around

BY: Graphic Business

There will be a staff visit by the International Monetary Fund (IMF) to the country this week.

The meeting will afford the government and the IMF staff the opportunity to discuss a raft of measures being undertaken by the government to restore the economy from its recent shocks, chief of which is the ‘elephant in the room’ — the rising debt stock.

At the last meeting of the Monetary Policy Committee (MPC) of the Bank of Ghana (BoG), it was revealed that Ghana’s public debt stock increased to GH¢351.8 billion in December 2021, representing a whopping 80.1 per cent of gross domestic product (GDP), compared to the GH¢291.6 billion (76 per cent of GDP) at the end of December 2020.

Of the total debt stock, domestic debt was estimated at GH¢181.8 billion, 41.4 per cent of GDP, while the external debt stood at GH¢170 billion, representing 38.7 per cent of GDP.

The meeting with the IMF staff also comes at a time when there has been growing price pressure on the back of increasing fuel prices and a steep decline in the value of the local currency, the cedi.

While inflation peaked at 15.7 per cent in February this year, the cedi lost about 14.6 per cent of its value to the US dollar last week, according to BoG data.

As earlier indicated, the fiscal deficit and the debt-to-GDP ratio also deteriorated to 9.7 and 80.1 per cent, respectively, in 2021, prompting the government to convene a Cabinet meeting a couple of weeks ago to explore solutions.

Although the intended visit of the IMF is routine, the Graphic Business finds it opportune, in view of the present situation in which we find ourselves as a country.

The numbers tell the story, and the verdict on the streets, as far as the cost of living is concerned, is not one we should be proud of as a nation.

While we are aware that many events, including the COVID-19 pandemic, a development which shook the world and continuous to wreak havoc on developing nations such as ours, have brought us to where we are currently, we think this present situation could have been curtailed through the implementation of stringent measures, including reining in expenditure to keep the deficit lower than it is currently.

The paper is, however, hopeful that even though we are in trying times, all hope is not lost because, as a country, we have the can-do spirit to turn things around.

We are also happy to note that while answering questions from the media after announcing measures to cushion the public against the myriad of challenges within the economy, the Finance Minister, Mr Ken Ofori-Atta, was categorical in admitting to the wealth of knowledge the IMF had, into which the government was willing to tap, match it against what it had and find solutions to the present challenges.

Finding ways to re-profile the debt to give the government some fiscal space for the future is crucial at this time and it is our hope that something concrete will come out of the discussions concerning that.

This is one of the reasons the meeting at this time with the IMF staff is crucial.

We know that the suggestions to be made by the IMF staff will not be binding on the government.

However, we are optimistic that something fruitful will come out to help put the economy back on track.