Many countries in the world including Ghana, have approached the International Monetary Fund (IMF) for support to solve their financial crisis sparked by the global coronavirus pandemic.
Ghana is among several countries in Africa seeking the support from IMF on the back of the adverse impact of COVID-19 on global economies.
Other African countries that have already gone for bailout from the Bretton Woods Institution include Kenya, Egypt, Cote D’Ivoire, Ethiopia and Morocco.
Ghana, one of West Africa’s best performing economies has been compelled to go for the bailout due to the current global economic crises.
Again, the global twin crises of COVID-19 and the geo-political tension between Russia and Ukraine have left the country in dire economic condition, pushing to look for support.
This followed a cabinet decision last Thursday after President Nana Akufo-Addo engaged the IMF Managing Director, Dr. Kristalina Georgieva, on the country’s decision to apply for the fund’s support.
Speaking on the back of the decision on JoyNews’ programme, ‘The Probe’ yesterday, the Minister for Information, Mr. Kojo Oppong Nkrumah said while Ghana was rebuilding its buffers and reserves after the 2020 war on COVID-19, the war in Europe has imposed more hardship on many Ghanaians at a time when the nation has no buffers.
“First, this is not domestically induced but rather an externally induced crisis. The country has been negatively impacted by the twin effects of the COVID-19 pandemic and the Russia-Ukraine war. This situation has been exacerbated by the adverse implication of global supply chain disruptions causing our economy to be in distress,” Mr. Oppong Nkrumah stated.
According to him, for government to be able to respond appropriately, it needs to tap into the cheapest and easily available option for mitigating these crises, which is the IMF.
This, he explained, has become even more important as domestic measures to contain the impact of the second crisis on the country’s fiscals are yet to yield optimal results
Mr. Oppong Nkrumah assured Ghanaians of safeguarding the country’s interest.
He said the Akufo-Addo administration has a proven track record of putting Ghana first and will do anything it takes to make sure the country does not come up short in its negotiations with the IMF.
Emergency support
The IMF Managing Director Kristalina Georgieva had told a meeting of G20 finance ministers and central bank governors that more than 100 countries had asked for emergency assistance in 2020.
She said the IMF was ready to use its “full toolbox and $1 trillion firepower” of lending capacity, noting that 10 countries have so far received emergency funding.
According to her, half of the remaining countries would have received their requested financial lifelines by the end of April.
The IMF Boss announced this after the fund issued a stark warning that the global economy was on track for the deepest downturn.
However, Ghana managed the economy without bailout from the IMF until it recently decided to ask for support.
Last Friday, President Nana Addo Dankwa Akufo-Addo directed the Minister for Finance, Mr. Ken Ofori-Atta, to begin formal engagements with the IMF for balance of payment support.
Background
Prior to the global crises, Ghana witnessed an average annual Gross Domestic Product (GDP) growth rate of 7 per cent in 2017, 2018, 2019 and part of 2020, when the economy was then generally acknowledged as one of the fastest growing in the world.
Unfortunately, the COVID-19 pandemic slowed the country’s economic momentum.
Ghana made a gradual rebound with a good economic outlook in 2021 in the short to medium term, contingent on an increase in demand for Ghana’s exports, improved business confidence, and successful implementation of the Ghana COVID–19 Alleviation and Revitalization of Enterprise Support programme.
The country ended 2021 with 5.4 per cent in growth but the Russia-Ukraine war further derailed the country’s growth.
This caused unfavourable increases in fuel prices, shortage of fertilizer and essential agro-processing inputs with its associated inflationary pressures.
