Policy Think Tank, Democratic Alliance Ghana, has indicated that the International Monetary Fund (IMF) bailout has hampered the socio-economic development of Ghana under the current Akufo-Addo administration.
The think tank made this known in a statement issued by its Public Relations Officer (PRO), Samuel Zumah.
On April 3, 2015 under the erstwhile Mahama administration, IMF approved a three-year programme under the Extended Credit Facility (ECF) for Ghana and offered an amount of $918 million to support its medium-term economic reform programme.
The programme was aimed at restoring debt sustainability and macroeconomic stability to foster high growth and job creation while protecting social spending.
The bailout was as a result of poor economic management by the erstwhile Mahama administration, which caused Ghana’s economy to experience large fiscal and external imbalances that led to a decline in growth and put Ghana’s medium-term prospects at risk.
Debt-to-GDP ratio was 72 percent, according to the IMF report in 2015 and the external position weakened considerably.
Democratic Alliance Ghana disclosed that “the Mahama administration took us to IMF which subsequently imposed restrictions on us. As part of the IMF conditionalities, government’s appetite for borrowing was tamed and limits were placed on government from going to the international capital market to borrow in order to improve the country’s debt distress situation and infrastructural deficit.”
It said, “On the expenditure side, the IMF advised government to cut the wage bill which has been one of the main reasons for the country’s fiscal imbalances by limiting the nominal increase in the total wage bill to 10 percent and scrap the 10 percent Cost of Living Allowance granted to workers.”
It explained that “Additionally, the Fund asked government to freeze employment into the public sector and also do away with subsidies on utilities and fuel by ensuring that the automatic adjustment formula was implemented to the core.”
“These prescriptions mirrored the IMF’s structural adjustment programme for Ghana that brought hardship, as subsidies were scrapped, public sector jobs frozen and wages kept at the minimum to slow down the developmental agenda of the Akufo-Addo led government.”
Democratic Alliance Ghana, in the statement said, that “in the midst of all these IMF conditionalities, the Akufo-Addo government has been able to implement some remarkable social interventions like the Free SHS, NABCO, restored nurses and teachers’ allowances, paid outstanding arrears to contractors, reduced cost of fertilizer by 50% for farmers, scrapped nuisance taxes, resolved Dumsor, reduced electricity tariffs drastically by 17.5% residential, 30% non-residential, 10% mining sector and 25% cut for Special Load Tariff and 10% reduction in water tariff and still maintained fiscal discipline under the IMF programme.”
According to the statement, “All these social interventions, policies and programes implemented by the Akufo–Addo government are to reduce hardship in the country, and so we wonder why the opposition NDC is blaming the current government for the hardship they created with their indiscretion in economic management.”
“The Akufo-Addo led government has shown beyond reasonable doubt that they are good managers of the economy, which is reflective in the current macro–economic stability in terms of the reduction in lending rate from 28% to 17%, inflation currently standing at 9.6% and the stabilization of the cedi.”
It added that “the government is on track in getting out of the IMF programme due to good economic management and meeting the main pillars of the programme in terms of ensuring a sizeable and frontloaded fiscal adjustment to restore debt sustainability, focus on containing expenditure through wage restraints and limited net hiring, as well as implementing new measures to mobilize additional revenues, structural reforms to strengthen public finances and fiscal discipline by improving budget transparency, cleaning-up and controlling the payroll.”
By Melvin Tarlue