Professor of development economics at the Department of Economics, University of Ghana, Ebo Turkson has called on the government to ensure fiscal discipline after securing a US$3 billion International Monetary Fund (IMF) balance of payment support.
The IMF executive board approved Ghana’s request for the US$3 billion bailout to support the country’s economic recovery on May 17.
The Bank of Ghana has already received the first tranche of US$600 million of the amount from the Fund.
Minister for Finance Ken Ofori-Atta confirmed the receipt of the cash and gave assurance that the money will be used for balance of payment and budget support, as well as to “stabilise the foreign exchange rate” and reduce inflation.
Ghana is expecting the next tranche of funds by June 2023.
All the funds will be directly deposited into the Bank of Ghana’s account to support Ghana’s balance of payments requirements.
IMF said its support programme for the country will focus on reining in inflation and rebuilding the country’s foreign reserve buffers.
The backing comes after Ghana last week clinched financial assurances from a bilateral creditors group co-chaired by China and France.
Touching on the development, Turkson said after receiving approval for the low interest loan from the IMF, “fiscal discipline is key” to keep Ghana’s economy on track.
Prof. Turkson said the country must demonstrate that it will not engage in reckless spending.
“We must give assurance to our investors that we are not going to engage in profligate spending to take us back,” he reiterated on Asaase Radio’s weekend news analysis show ‘The Forum’ on Saturday.
According to him, “Credibility is most important…. And that comes with this IMF support. By this we’ll be able to reassure our investors that we are credible and they can do business with us.”
Prof. Turkson said the government must religiously follow the terms of the IMF’s economic recovery programme “even after exiting it” while calling on successive governments to do same.
“We need to have a fiscal compact that every government will follow. No government can develop this economy within four or eight years. We can only contribute to the effort of changing the development of the country,” he said.
According to him, under the IMF programme “we are going to have some tough times coming up but things would have been worst without it.”