Ghana not going to IMF because of domestic economic mismanagement – Oppong Nkrumah

The Minister for Information, Kojo Oppong Nkrumah has indicated that the government’s decision to go to the International Monetary Fund (IMF) for economic support is not a situation of a self-induced crisis.

He explained that the conditions that has compelled the Akufo-Addo administration to go to the IMF for support are completely different from the situation that existed previously when Ghana went to the Fund in 2014/15.

The Minister further indicated that it is not about the domestic economic management rather, it is about an international crisis-induced phenomena that has brought over one hundred countries including Ghana, to a point where their buffers have been eroded and they need to respond.

” When you have a self-induced crisis and then you have to go to the Fund for a balance of payment support programme, then it raises questions about the way you are managing fiscal policy, monetary policy and the broader economy”. 

“But this is not a situation in which you have a self-induced crisis. This is a different scenario all together. It is NOT about your domestic economic management, it is about an international crisis-induced phenomena that has now brought you to a point where your buffers have been eroded and you need to respond”.

“That is why for example, from 2020, about half of the world’s countries are applying to the Fund for some support. It is not to say that all of the people who manage all of these over one hundred economies do not know how to go about their jobs  but is it evident of the fact that something external, something exogenous has hit, that is why today, Egypt, Kenya, I understand Tunisia is also applying for some sort of support,  are asking for support” He said this in an interview with TV3’s Paa Kwesi Asare.

Asked again whether the government has been embarrassed by this decision, he answered that “The reasons that have brought us here are quite clear.

“If you look at the performance of Ghana’s economy between 2017 and 2019, yes there were still some structural challenges  in Ghana’s economy but the economy was performing way better based on, particularly, the fiscal and monetary policy measures and the broader economic policy measures that the administration was rolling out.

“The results were that we were doing better , inflation rate was going down  , interest rates were going down , we were having the opportunity to create some more jobs and some more development  programmes in the economy.  In 2020 ,that stopped,  primarily because our economy still with its challenges, was  hit by major external factor, not  just our economy, many economies around the world. In 2021, we started a path to recovery, so you will notice that in 2021 even though we had depleted a good chunk of our buffers and our reserves , we were still now building back better, trying to rebuild our reserves and trying to get our economy back  on track.

“Then, the first part of 2022, I think in February, you had what occurred in the Black Sea area, giving the world another major crisis. Now there is high food prices all over the world , high fuel prices , high cost of financing  and it is biting  Ghanaian a lot.

“Do you have the domestic buffers still  to respond to them?  You don’t.  You are now just trying to recover and rebuild  and so if you look at all your  options, despite the initial  thinking that  you could rebuild those buffers  domestically, the president has decided that it is important we  start engaging with the Fund for the possibility of  getting a balance of payment  support from them. To help us rebuild our buffers  and better mitigate  what is happening around the world  and happening here in Ghana as well.

President Nana Addo Dankwa Akufo-Addo on Friday July 1 directed the Finance Ministry to begin engagements with the IMF for a bailout.

Minister for Finance, Ken Ofori-Atta will be leading the negotiations with the IMF in the coming days.

The team of IMF officials is expected to arrive in the country on Wednesday, July 6th meet the Finance Ministry, the Economic Management Team and the Presidency during their one-week stay.