Senior Minister Designate Yaw Osafo-Maafo has stated that the new government will re-negotiate Ghana’s deal with the International Monetary Fund (IMF). ”Now the IMF program will certainly be reviewed and there are two main reasons why the IMF program must be reviewed I have already hinted to one of the bosses of the IMF.”
“Now President Nana Akufo Addo came out with a manifesto and in that manifesto, he needs physical space to move it. The current program literally squeezes all the physical space out and therefore from the point of view of the program of the NPP, the IMF program must be reviewed.”
Ghana in 2015 signed onto a 918 million dollar extended credit facility program with the fund.
Ghana has so far received a total of about US$464.6 million as disbursements from the IMF.
The latest was on September 28, 2016. The program aims to restore debt sustainability and macroeconomic stability in the country to foster a return to high growth and job creation, while protecting social spending.
The deal which was not approved by Parliament has been heavily criticized by the new government, raising concerns that it will be reviewed under their tenure. Calls for the renegotiation of the deal, however, has attracted mixed reactions from economists. While some have welcomed the move others say it is needless.
Economist with the Institute of Fiscal Studies (IFS) Dr Adu Sarkodie, for example, believes that the new government must restructure the deal to grow the economy. “We must renegotiate certain parts of the IMF deal.
One of the items that have contributed to the slow effectiveness of the program is that they have front loaded the policies and programs and have kept the money.
So in other words I go into a deal with you, I expect you to take certain good steps before I hand you the money but it has not been the case in the previous IMF programs.” He added, “So I think that this time round the IMF should rather front load the money.
They should frontload about 70% of the remaining 50% for us to stabilize because the macroeconomic stability is the most important thing.”
While an economist at the University of Ghana Business School, Dr. Lord Mensah has stated that renegotiating the deal is not needed because the IMF programme is yet to mature and the deal must be allowed to mature before any changes could be made to it.
“Personally, I don’t think it is something that we need to consider — we have to allow it to roll, let’s realise its maturity, when it comes to the IMF and its allied agencies, it is not the government that goes into negotiations, but it is the country.
The government which was voted by the people, always in such case, represents the country; so a new administration does not mean that the agreement has to be cancelled.”
But speaking to Law makers during his vetting as Senior Minister Yaw Osafo- Maafo said the new government will not abrogate the deal but will re-negotiate it to fit into its targets and objectives.
”Now the IMF program works along achieving targets and the targets set between the government and the IMF, so far most of the targets have been missed therefore whether we even ask for it or not the IMF will themselves want the program reviewed, because if we talked about ensuring that your growth end of the year is 5.3% and your growth end of the year is 3.3% its way out.
If we want to talk about deficit being not more than 5% and everybody thought deficit was about 5% ……figures I’m seeing from Bank of Ghana deficit is getting between 8 and 9% then it is enough for the IMF itself to request for a review because you can’t go on when you haven’t met the targets, going on with what.
Therefore the program will certainly be reviewed from two angles from the targets angle and from our own need to factor in our manifesto and objective in governance”. Mr Osafo- Maafo stated.