Learning to Love the IMF
My instinct is decidedly anti-IMF. The International Monetary Fund ranks just a little below Suarez in my pantheon of hate figures.
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As the Akan proverb says, the hen can execute the most exquisite dance steps but the hawk would not be impressed. The IMF is my number one bogey institution; the hen to my hawk. It cannot impress me.
The case against the IMF is a simple one. It was designed as international safeguard against swings in the balance of payment system and to promote international economic cooperation.
It was meant to ensure that no country could take advantage of another country’s balance of payment difficulties by providing short-term loans to bridge over their fiscal hole. The IMF was designed to make us rich.
Unfortunately, in the years since I got to hear the term IMF, the acronym has spelt nothing but trouble for us in Ghana and other developing countries. It has made us poorer.
Every time I hear or see the term “IMF” it is followed by “conditionalities”, a word made even uglier by the “lities” at the end, as if mere conditions would not suffice. Those conditionalities have wreaked havoc on our nation.
It is easy not to like the IMF because instead of being the democratic organisation accessible to all equally, it has evolved into an instrument with which the rich nations of the West take their pound of flesh from impish Third World countries whose crimes are to pretend to be equal in the comity of nations.
Look at it this way: balance of payment difficulties arise because a country is unable to pay its way in another currency. If we lived on a desert island by ourselves and could simply print all the cedis we needed, there would be no problem; we would just print billions and live our merry lives. Unfortunately, we don’t live on a desert island and we are not shut in from the rest of the world.
In the real world in which Ghana and the IMF operate together with 187 countries, some countries had a huge head start long before the post-second world war consensus on international financing was put together.
It is the Third World countries that are the main losers in the current international economic arrangements.
The arguments are well known. We sell to other countries primary commodities such as cocoa, gold, oil and timber (when we had forests).
We import from industrialised countries everything that we need to be part of the modern world. When the value of what we buy exceeds the value of what we sell, we are in trouble.
So, being not an economist and hence guided by commonsense, it appears to me that the solution would be either to import less or export more; or do both at once! This is where the economists laugh at me and say “it is easier said than done”.
The IMF is expected to enable Ghana stabilise its current all-over-the-floor Azonto cedi. That is the theory. If the IMF gave Ghana billions of dollars for free to do this stabilisation, it could probably work.
All our governments and even the stupidest among us have known that there is the need to obtain a couple of billion dollars to plug an obvious hole in our finances; hence, the NPP’s attempt to borrow money from a hairdresser’s salon and the current government’s dance macabre over the elusive Chinese loan.
We know we need money – lots of it to plug that hole, but from where cometh our help?
So step to the plate, IMF. The IMF is a lender of last resort, that is to say the loan shark you visit when everything else has failed. Indeed, most people who go to loan sharks go because by that time they would have exhausted their CREDIBILITY with everyone else.
That is exactly what nations do by the time they decide to go to the IMF. Like any loan shark, the IMF knows that you come when you are on your knees; the children are crying behind the door for their school fees, there is only one day’s supply of food in the house, your old parent has called to ask for money to go to the hospital – the loan shark knows this so be ready to be skinned alive.
This is exactly the situation the Government of Ghana finds itself in. It has borrowed from wherever it can. It has delayed every payment it can. It has responded to demonstrations and strikes by paying some money here and there just to stave off the mega payments. Above all, it has tasked us to the hilt. All to no avail.
In the first six months of this year, the government borrowed about GH¢6.3 billion from both domestic and foreign lenders within the first three months of this year, pushing the country's total debt to GH¢58.4 billion, according to Bank of Ghana figures.
Now, note that domestic lenders include you and me in the shape of delayed NHIS payments, school feeding money and the like. And we are not best pleased about this.
Inflation is raging and our real incomes have dwindled leading to demonstrations, strikes, occupy and Red Friday, among other responses.
The government hopes, and we should all hope too, that some kind of respite will come, and their hope is that the IMF will intervene to provide this respite. But it will not come easily or cheaply.
We must brace ourselves to meet those conditionalities, which typically means selling off state assets and sacking public sector workers. That is what happens when you go to a loan shark.
This is the real reason why we hate the IMF on such industrial scale; public support for the move runs very low. One can understand why ministers strenuously denied any such deal until they no longer could hide it. However, we have to understand that the IMF, like the loan shark, is not the cause of our misery.
I am almost beginning to learn a new language where the IMF is concerned. Let us use the word “discipline”, which has been deleted from Ghanaian dictionaries for many years now.
Going to the IMF is an admission that we have lost control of our own financial matters rather like drug addicts lose control over their lives. Our governments behave exactly like loan addicts who cannot stop.
We need discipline and commonsense to get us back to financial health. Look around you; is it absolutely required that every government appointee should ride in a big 4x4 vehicle cruising around Accra on free fuel?
Is it necessary to have such a huge number of ministers, deputy ministers, presidential staffers and many more such people on the government payroll?
Let us look around us critically without donning the usual political lenses; let us look around our immediate environment and see if we are not all contributing to the mess?
A few weeks ago, I wrote about the practice of people asking for their grocery bills to be put on receipts purported to be for medicines so that they would be reimbursed by their employers. People who do this, and the number must be big, also no doubt join in condemning corruption!
I hope the IMF will be here long enough to prevent the massive election-related spike in spending, which in a sense got us here in the first place.
If I can’t love the IMF, at least I know it is not to blame for the woes it will bring.