{"id":43677,"date":"2014-09-01T10:04:56","date_gmt":"2014-09-01T10:04:56","guid":{"rendered":"http:\/\/4cd.e16.myftpupload.com\/?p=43677"},"modified":"2014-09-01T10:40:00","modified_gmt":"2014-09-01T10:40:00","slug":"imf-bailout-team-storms-ghana-this-week","status":"publish","type":"post","link":"https:\/\/citifmonline.com\/2014\/09\/imf-bailout-team-storms-ghana-this-week\/","title":{"rendered":"IMF bailout team storms Ghana this week"},"content":{"rendered":"

A team from the International Monetary Fund (IMF) will hit the shores of Ghana this week to discuss how the country\u2019s ailing economy can be salvaged.<\/p>\n

The team will engage government in negotiations and then fashion out a programme to suit the country\u2019s needs as well as discuss policy alternatives with the Bank of Ghana.<\/p>\n

President John Mahama early last month directed that immediate initiatives be taken to open discussions with the International Monetary Fund (IMF) and other development partners in support of Ghana\u2019s programme for stabilization and growth.<\/p>\n

\"President<\/a>
President John Mahama<\/figcaption><\/figure>\n

According to President Mahama the decision to open discussions with the International Monetary Fund was not because of the failure of government\u2019s own home grown solutions, but rather because of the need for policy credibility and confidence from the international financial institutions, capital markets and investors for the measures being implemented to restore economic stability and growth.<\/p>\n

\u201cSo we are going to discuss with the IMF how we can turn the deficit around quickly and create the kind of confidence even in the short-term narrative,\u201d<\/p>\n

The International Monetary Fund in August announced it had received a formal request from Ghana to initiate discussions on an economic programme that could be supported by the IMF.<\/p>\n

The Deputy Managing Director of the IMF, Min Zhu in a statement said: \u201cThe Fund stands ready to help Ghana address the current economic challenges it is facing.\u201d<\/p>\n

\u201cAn IMF team will be sent to Ghana in early September to initiate discussions on a programme,\u201d he added.<\/p>\n

Ailing economy <\/b><\/p>\n

The Ghanaian economy has been faced with some critical ailing conditions for some time now amidst rising inflation, a depreciating currency, high budget deficit amongst others.<\/p>\n

Inflation currently stands at 15 .3 percent the highest rate since February 2010.<\/p>\n

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).<\/p>\n

The story is not different for the local currency the cedi.<\/p>\n

Since the beginning of the year it has depreciated by 27 percent against the major foreign currencies the US dollar, British Pound and the Euro.<\/p>\n

According to the Bank of Ghana\u2019s financial stability report released in March this year the Cedi\u2019s continuous depreciation against the major trading currencies as well as the continuous hikes in inflation is having a toll on profits of banks.<\/p>\n

Government is still struggling to deal with the country\u2019s rising budget deficit.<\/p>\n

Bailout opposition <\/b><\/p>\n

Despite these challenges some quarters have appealed to government to stay away from an IMF bailout.<\/p>\n

The Trades Union Congress (TUC) for example has warned government to desist from any move to go to the International Monetary Fund for a bailout in the midst of current economic challenges facing the country.<\/p>\n

\"Kofi<\/a>
Kofi Asamoah, TUC, General Secretary<\/figcaption><\/figure>\n

The TUC\u2019s Secretary General Kofi Asamoah says resorting to the IMF to solve the matter will only worsen it.<\/p>\n

He believes resorting to the IMF in previous years was a mistake that should not be repeated.<\/p>\n

\u2018Times 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\u2019.<\/p>\n

A former Finance Minister under the erstwhile Kufuor administration, Dr. Anthony Akoto Osei has also warned Ghanaians to brace themselves for more hardship as the country seeks a bailout from the International Monetary Fund.<\/p>\n

\"Dr<\/a>
Dr Anthony Akoto Osei, Former Finance Minister<\/figcaption><\/figure>\n

\u201cI think that we should be ready for things to be tough,\u201d he remarked.<\/p>\n

The implementation of IMF\u2019s structural adjustment programme in the 80\u2019s saw subsidies wiped, public sector jobs cut while wages kept low, moves which however\u00a0restored economic growth.<\/p>\n

IMF stance <\/b><\/p>\n

But the Managing Director of the International Monetary Fund Christine Lagarde has 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.<\/p>\n

\"Christine<\/a>
Christine Lagarde, IMF boss<\/figcaption><\/figure>\n

\u2018Structural 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\u2019.<\/p>\n

But renowned economist Kwame Pianim has described government\u2019s decision to apply for a bailout from the IMF as \u2018\u2019a stabilising anchor\u2019\u2019 that will re-position Ghana\u2019s economy for growth and macroeconomic stability.<\/p>\n

\"Kwame<\/a>
Kwame Pianim, Economist<\/figcaption><\/figure>\n

According to him, the decision to go back to the IMF only suggests the country is faced with a structural problem that has not been addressed.<\/p>\n

\u2018\u2019It seems there are some structural issues that we as a country have not adequately addressed; the issue now is the lack of policy credibility\u2019 he said<\/p>\n

Financial analyst Sydney Casely-Hayford early on told Citi Business News<\/strong> Ghana can only access $569 million as bailout from the International Monetary Fund (IMF) due to the nature of the economy.<\/p>\n

According to him, Ghana has a special drawing right with the IMF which allows it to only access $569million as bailout due to the underlying values of the nation\u2019s debt and macro-economic indicators<\/p>\n

He also revealed that per Ghana\u2019s drawing right, it can either apply for 100% of its drawing right, double or triple the amount depending on the programme the country signs onto.<\/p>\n

By:\u00a0 Vivian Kai Mensah\/citifmonline.com\/Ghana<\/p>\n

 <\/p>\n

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

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