As the Economic Management Team engages officials of the International Monetary Fund (IMF) over a possible Balance of Payment (BoP) support programme, Ghanaians are highly optimistic that something positive will be the outcome.
The expectation is so high because the nation is in the mood of getting out of the economic challenges quickly.
Ghana has been battling to stabilise and possibly reduce its debt that has grown to over 80 per cent of gross domestic product (GDP) at the end of March, from 62.5 per cent five years ago.
The BoP support will be used to shore up the country’s international reserves, stabilise the cedi, continue smooth payments for imports and restore conditions for strong economic growth.
IMF officials – led by the Mission Chief for Ghana, Carlo Sdralevich – arrived in the country last Tuesday and held introductory talks with stakeholders, including the Vice-President, Dr Mahamudu Bawumia, on July 6.
As talks enter the third day today, a former Finance Minister, Seth Terkper, has asked the government to be open and transparent with the IMF team.
He wants the government to present accurate and transparent data on the true situation of the economy, especially with respect to figures on the deficit, to elicit the right outcomes from the talks.
We do not have any doubt that the IMF team is in the country to help restore macroeconomic stability, safeguard debt sustainability, promote inclusive and sustainable growth and address the impact of the crisis in Ukraine and the lingering pandemic.
It is with this in mind that we believe Mr Terkper’s advice cannot be ignored. He himself went to the IMF when he was the Finance Minister in 2015. Prior to that, under the late President J.E.A. Mills, when he served as the deputy finance minister, the country went under an IMF programme. He, therefore, comes with some experience and sharing this perspective on the negotiations cannot be taken lightly.
We know for sure that some of the issues that are likely to come up in the negotiations are the energy sector bailout costs, where the government may be required to go back to comprehensive reporting on the sector, showing the deficit, arrears and debts in the sector to ensure greater transparency.
Fiscal returns for the first half of the year and the 30 per cent expenditure cuts, financial sector payments, the wage bill and internally generated funds could also be high on the agenda.
Another issue that we suspect could feature in the radar of the visiting IMF team for discussion will be the financing of the budget deficit by the Bank of Ghana.
Other discussions will centre on expenditure, market reserve management, domestic arrears, expenditure controls and fiscal reporting.
For us at the Daily Graphic, accurate macroeconomic and financial data are essential for economic decision-makers.
This is because almost everything that governments and central banks decide is justified by the right data. Anything short of this could best be described as “garbage in garbage out”.
We are optimistic that the data to be provided by the county’s negotiating team will show the true national accounts and balance sheet analysis to help detect economic vulnerabilities and risks.
We are confident that if the government and its agencies engage the IMF team in a frank, honest and transparent manner, the outcomes will be successful, The world is watching closely how the government works with the IMF to address the challenges within the economy, a move that will elicit a positive or negative reaction from the international financial markets.
Now that we are negotiating with the IMF, we must work to ensure that we exit the programme and be able to sustain the outcomes.