{"id":37974,"date":"2014-08-08T16:23:00","date_gmt":"2014-08-08T16:23:00","guid":{"rendered":"http:\/\/4cd.e16.myftpupload.com\/?p=37974"},"modified":"2014-08-08T16:23:00","modified_gmt":"2014-08-08T16:23:00","slug":"ghanas-plea-to-imf-a-sad-recognition-of-the-perils-of-prosperity","status":"publish","type":"post","link":"https:\/\/citifmonline.com\/2014\/08\/ghanas-plea-to-imf-a-sad-recognition-of-the-perils-of-prosperity\/","title":{"rendered":"Ghana\u2019s plea to IMF a sad recognition of the perils of prosperity"},"content":{"rendered":"

Gladys Obeng returned home in Accra recently to find her two children in tears after their day at primary school. When she asked what was wrong, they told her they had barely eaten since morning.<\/p>\n

\u201cI give them 2 cedis [35p] every day to buy\u00a0kenkey<\/a>\u00a0and bread for lunch. But with the prices in Ghana now, the money was buying them less and less food every month.\u201d<\/p>\n

Once seen as a\u00a0shining economic success story<\/a>, the situation in the Obeng household is mirrored across Ghana as soaring inflation and interest rates coupled with\u00a0a plunging currency<\/a>\u00a0take their toll on citizens.<\/p>\n

When the west African nation discovered the\u00a0continent\u2019s biggest oil find<\/a>of a generation in 2007, expectations were high. Petrodollars pumped from the Jubilee oilfields would propel the country into middle-income status if handled wisely over a decade, the International Monetary Fund (IMF) predicted.<\/p>\n

Consultants from Norway advised on how to avoid the oil curse, seen starkly in neighbouring Nigeria.<\/p>\n

And there was reason to be hopeful: already the world\u2019s second-largest cocoa grower, behind Ivory Coast, and Africa\u2019s second-largest gold exporter, behind South Africa, a relatively successful track record of managing a commodity-based economy made Ghana the poster child for a heady \u201cAfrica rising\u201d narrative.<\/p>\n

But this week, after months of conflicting statements,\u00a0the government said it would seek financial help from the IMF<\/a>\u00a0in a bid to end a deepening currency crisis exacerbated by mismanagement of oil revenues.<\/p>\n

\u201cThe president has directed that we open negotiations with the IMF,\u201d finance minister Seth Terkper told Reuters, saying talks would focus on specific solutions, rather than a general assessment of the economy.<\/p>\n

The cedi dropped up to 40% against the US dollar this year, making it the world\u2019s worst-performing currency alongside copper-rich Zambia\u2019s kwacha.<\/p>\n

From tinned tomatoes to tractor tyres, prices have doubled and occasionally tripled over 24 months. Obeng, a cook who takes home around 400 cedis (\u00a368) a month, can no longer afford a shared taxi to work, and has resorted to cutting back on her own meals to feed her children. \u201cIf me and my husband eat three times a day, we can\u2019t give the kids food,\u201d she said.<\/p>\n

Ghana\u2019s woes are partly down to mismanaging its oil revenues \u2013\u00a0which have been more modest than predicted<\/a>\u00a0\u2013 as it racked up borrowing while failing to keep public spending under control. But the predicament is partly engendered by prosperity, too.<\/p>\n

Spurred by petrodollars, the government has bought popular support by increasing civil servant wage bills and subsiding fuel. Yet a booming middle class aspiring to buy foreign products meant demand for imports rose, further weighing down the local currency.<\/p>\n

That pushed the current account deficit \u2013 the amount the government owes \u2013 to 12% of GDP last year, a figure expected to be 10% this year in a potential symptom of the resource curse that often feeds corruption.<\/p>\n

\u201cIt is a mark of Ghana\u2019s success that an IMF deal looks like a crisis, compared, say, with a crisis like an Islamist insurgency or a sci-fi style plague,\u201d says Antony Goldman, director of Promedia Consulting. \u201cBut it is a reminder that politicians are under an obligation to deliver if they are to remain relevant and for there to be stability. It is a social contract that Ghana has managed pretty well these last 20 years, but inertia in government, if it remains unchecked, could prove a more serious challenge.\u201d<\/p>\n

A home-grown Occupy movement this year was largely led by members of the middle class whose demands included an end to worsening inequality, corruption scandals and increasingly unreliable power.<\/p>\n

Rising prices have eroded the cushion many middle-class homeowners counted on. The free-falling cedi means many service providers, such as landlords, now insist on payments in dollars instead.<\/p>\n

Joseph Oduro-Frimpong and his wife have had to cut back on US student loan repayments and savings. \u201cWe have to purchase dollars at a higher rate. Previous to the rising inflation we were able to make more than the minimum on our student loan monthly payments. Recently it has mostly been just the minimum,\u201d said the Accra-based school teacher, whose colleagues report similar stories. \u201cEveryday items cost so much more at the stores that at the end of the month there seems to be little left for savings.\u201d<\/p>\n

Still, analysts say the situation should serve as a cautionary experience, which the country can still extricate itself from.<\/p>\n

\u201cThere are no quick fixes to any of these economic pressures, but [an IMF] programme should help put a floor on the crisis,\u201d said Philippe de Pontet, Africa director at Eurasia Group. \u201cThe [John Dramani] Mahama administration, which is deeply unpopular because of the economic crisis, knows that its political fortunes in the 2016 elections hinge on an economic turnaround.\u201d<\/p>\n

 <\/p>\n

Source: The Gurdian<\/p>\n","protected":false},"excerpt":{"rendered":"

Gladys Obeng returned home in Accra recently to find her two children in tears after their day at primary school. When she asked what was wrong, they told her they had barely eaten since morning. \u201cI give them 2 cedis [35p] every day to buy\u00a0kenkey\u00a0and bread for lunch. But with the prices in Ghana now, […]<\/p>\n","protected":false},"author":5,"featured_media":37978,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[38],"yoast_head":"\nGhana\u2019s plea to IMF a sad recognition of the perils of prosperity - Citi 97.3 FM - Relevant Radio. 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