The Trades Union Congress (TUC) has warned government to desist from any move to go to the International Monetary Fund (IMF) for a bailout in the midst of current economic challenges facing the country.
Finance minister Seth Tekper earlier asserted that the country may seek an IMF cover if it becomes necessary to lessen the burden of current fiscal challenges.
The Ghanaian economy for months has been faced with some critical ailing conditions amidst rising inflation, a depreciating currency, high budget deficit amongst others.
Inflation currently stands at 14 .5 percent the highest rate since February 2010.
Year-on-year inflation accelerated from 14.0 percent in February mainly due to higher cost of housing, water and electricity (+43.8 percent), transport (27.3 percent), clothing and footwear (16.7 percent), health (13.4 percent), recreation and culture (13.8 percent), food and non-alcoholic beverages (8.2 percent).
The story is not different for the local currency the cedi.
Since the beginning of the year it has depreciated by over 18 percent against the major foreign currencies the US dollar, British Pound and the Euro.
According to the Bank of Ghana’s latest financial stability report released in March this year the Cedi’s continuous depreciation against the major trading currencies as well as the continuous hikes in inflation is having a toll on profits of banks.
The banking sector was one of few sectors in the country that was making impressive strides despite the current economic challenges.
This appears to be a thing of the past now.
Despite the growing challenges the TUC’s Secretary General Kofi Asamoah says resorting to the IMF to solve the matter will only worsen it.
He believes resorting to the IMF in previous years was a mistake that should not be repeated.
‘Times are hard the prognosis on the economy is not good either but we must at this point resist the temptation to seek IMF bailout. As we has stated, it is the IMF-sponsored policies that have brought us almost to the brink. No country has developed following to the advice of the IMF. Resorting to the IMF for financial support was a mistake we made in the past. We must take responsibility of this mistake and find solution to our problem’.
The implementation of IMF’s structural adjustment programme in the 80’s saw subsidies wiped, public sector jobs cut while wages kept low, moves which however restored economic growth.
Early on the Managing Director of the International Monetary Fund Christine Lagarde downplayed assertions that a bailout programme from them could see Ghana go through another phase of hardship while the country tries to meet its strict conditionality in order to restore fiscal discipline and macroeconomic stability.
‘Structural adjustments? That was before my time. I have no idea what it is. We do not do that anymore. No, seriously, you have to realize that we have changed the way in which we offer our financial support. It is really on the basis of a partnership’.
By: Vivian Kai Mensah/citifmonline.com/Ghana