A financial and economic Journalist, Kwabena Adu Koranteng, has advised President Akufo Addo to continue with the current economic management program it is pursuing and expand the tax next with regard to domestic revenue mobilization to raise the needed revenue to manage and sustain the economy instead of falling on the International Monetary Fund for cover.
According to the nifty Financial and economic Journalist, going to the International Monetary fund for financial assistance or financial support to sustain the economy will be a disaster for this particular government which highly criticised the erstwhile NDC administration led by John Dramani Mahama for falling on the IMF to save the country’s economy between 2014 and 2016.
“John Mahama in 2014 sought cover from the IMF to secure what he described as policy credibility. It was a time that the country’s economy had coiled into a cave and the national currency was on a free fall. The cedi had fallen by 40% against the US dollar in 2014, making it one of the world’s worst-performing currencies at the time. Before then, the country had gone to the IMF for help in 2009, under the same NDC government led by the late John Evans Atta Mills when it secured a $600m (£360m), three-year aid package.”
Every IMF deal has been a bitter pill for Ghana to swallow was people are eager to forget the harsh economic conditions of the 1980s under structural economic adjustment programmes.
He said NPP is not known for seeking a bailout of financial credibility from the IMF. According to him, the government must not succumb to pressure from some economic analysts to push the country into IMF control.
He said seeking shelter from the IMF could come with harsh conditions that will make the government unpopular. For instance, IMF will not allow the government to employ people in the public service; it will demand that the public workforce be reduced. In this regard, the government would be forced to lay off workers. There would be a further increase in fuel prices and tariffs for incivility services will be increased under IMF to raise revenue for the government. These conditions are harsh and will make the government unpopular. Such a condition will directly send the government into opposition as it did to the National Democratic Congress in 2016.
Historical evidence suggests that IMF administered rescue programmes are actually a recipe for disaster. They worsen rather than rescuing the situation.
The IMF does not have a good historical record. A view of the many countries which have subjected themselves to the IMF doesn’t inspire confidence. Instead of bailing out countries, it has created a list of countries suffering from debt dependency.
Of all the countries across the world that have been bailed out by the IMF:
• 11 have gone on to rely on IMF aid for at least 30 years
• 32 countries had been borrowers for between 20 and 29 years, and
• 41 countries have been using IMF credit for between 10 and 19 years.
This shows that it’s nearly impossible to wean an economy from the IMF debt programmes. Debt dependency undermines a country’s sovereignty and integrity of domestic policy formulation. The debt conditions usually restrict pro-growth economic policies making it difficult for countries to come out of recession.
IMF’s poor record is partly influenced by the policy choices that it imposes on countries it funds. The IMF policy choices for developing countries, known as a structural adjustment programme, have been widely condemned. The main reason is that they insist on austerity measures which include; cutting government borrowing and spending, lowering taxes and import tariffs, rising interest rates and allowing failing firms to go bankrupt. These are normally accompanied by a call to privatise state-owned enterprises and to deregulate key industries.
These austerity measures would cause great suffering, poorer standards of living, higher unemployment as well as corporate failures. The current technical recession would be magnified into a full-blown crisis, leading to even greater shrinking of investment.
Columnist: Kwabena Adu Koranteng