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Unprecedented global challenges pushed us to IMF – Ofori Atta

Source The Ghana Report

Finance Minister, Ken Ofori-Atta, has blamed the decision to go to the International Monetary Fund (IMF) for financial support on unprecedented global challenges.

Presenting the Mid-year Budget Review on Monday, 25 July 2022, in parliament, the sector minister said Ghana’s economy was on the right path until the emergence of Covid-19 and the Russia-Ukraine war.

“Yes, I know this government assured the nation of a Ghana beyond Aid and our plans and programmes for economic transformation have been designed to achieve just that, and indeed, I did say that Ghana would not embark on an IMF programme. We did not just say it.

“We also took measures towards the attainment of that objective including the passage of the Fiscal Responsibility Act and instituting a number of irreversibility measures, and also launching Ghana CARES “Obaatan Pa” programme for economic revitalisation and transformation.

“Unfortunately, unprecedented global developments over the past two years, especially in these last six months, have really and truly disrupted our efforts. Governments across the world have had to change course to tackle the current crisis.

“Governments that less than a year ago were busily talking about energy transition and green and cleaner fuels have gone back to firing their coal plants. Governments that are known for low taxes are now raising taxes to tackle growing deficits. These are not ordinary times; not for Ghana, not for Africa, and certainly not for the whole world,” he said.

He urged the public to acknowledge that the situation being experienced is different — the first of its magnitude in the Fourth Republic.

“It is trite knowledge that global developments including the impact of the COVID-19 and the Russia-Ukraine war, have really undermined and disrupted most economies. Governments across the globe are facing strikes and demonstrations, as workers see their standards of living plummeting with prices of goods and services jumping to heights not seen in over two generations,” he added.

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Meanwhile, initial engagements between the government and the Fund ended on a positive note on Wednesday, 13 July 2022.

An IMF staff team led by Carlo Sdralevich visited Accra from 6 July to 13, 2022, to assess the current economic situation and discuss the broad lines of the government’s Enhanced Domestic Programme that an IMF lending arrangement could support.

The IMF team met with Vice President Dr. Mahamudu Bawumia, who is the head of Ghana’s Economic Management team, Finance Minister, Ken Ofori-Atta, and Governor of the Bank of Ghana, Dr. Ernest Addison.

The team also met with the Parliament’s Finance Committee, civil society organisations, and development partners, including UNICEF and the World Bank to engage in social spending.

At the conclusion of the mission, Mr. Sdralevich issued the following statement:

“Ghana is facing a challenging economic and social situation amid an increasingly difficult global environment. The fiscal and debt situation has severely worsened following the COVID-19 pandemic. At the same time, investors’ concerns have triggered credit rating downgrades, capital outflows, loss of external market access, and rising domestic borrowing costs.

“In addition, the global economic shock caused by the war in Ukraine is hitting Ghana at a time when the country is still recovering from the Covid-19 pandemic shock and with limited room for maneuver. These adverse developments have contributed to slowing economic growth, accumulation of unpaid bills, a large exchange rate depreciation, and a surge in inflation.

“The IMF team held initial discussions on a comprehensive reform package to restore macroeconomic stability and anchor debt sustainability. The team made progress in assessing the economic situation and identifying policy priorities in the near term. The discussions focused on improving fiscal balances in a sustainable way while protecting the vulnerable and poor, ensuring the credibility of the monetary policy and exchange rate regimes, preserving financial sector stability, and designing reforms to enhance growth, create jobs, and strengthen governance.

“IMF staff will continue to monitor the economic and social situation closely and engage in the coming weeks with the authorities on the formulation of their Enhanced Domestic Program that could be supported by an IMF arrangement and with broad stakeholders’ consultation. We reaffirm our commitment to support Ghana at this difficult time, consistent with the IMF’s policies.”

 

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