After facing serious difficulties with Ghana’s economy, the government is getting ready to start negotiations with the International Monetary Fund (IMF) for a bailout.
The Information Ministry made this announcement today, Friday, July 1, 2022, in a statement.
“The President of the Republic, Nana Addo Dankwa Akufo-Addo, has authorized Finance Minister Ken Ofori-Atta to commence formal engagements with the International Monetary Fund (IMF), inviting the Fund to support an economic program put together by the Government of Ghana.”
“This follows a telephone conversation between the President and the IMF Managing Director, Miss Kristalina Georgievs, conveying Ghana’s decision to engage with the Fund,” the statement noted.
As part of a larger attempt to hasten Ghana’s recovery from the obstacles brought on by the Covid-19 pandemic and, more recently, the Russia Ukraine crises, the engagement with the IMF will seek to provide balance of payment support.
Ghana’s economy is in serious trouble right now due to factors including the growing public debt, rising inflation, rising fuel prices, and cedi depreciation, among others.
Ghana’s overall public debt stock is estimated by the Bank of Ghana to be US$ 55.1 billion (GH391.9 billion) as of March 2022.
The debt decreased in value throughout the first three months of the year, falling from $58.4 billion in January to $55.1 billion in March.
The government has made a number of attempts, such as the implementation of the Electronic Transfer Levy (E-levy), to raise enough money to reverse the deteriorating economic conditions, but none of these have been successful.
Only 10% of the anticipated money is being collected by the government’s Electronic Transfer Levy (E-levy), which was implemented to raise additional funds for the government.
Earlier this week, Gabby Asare Otchere-Darko, a prominent figure in the ruling New Patriotic Party, declared that the E-levy had underperformed because it had only produced 10% of the anticipated revenue.
The debt decreased in value throughout the first three months of the year, falling from $58.4 billion in January to $55.1 billion in March.
The government has made a number of attempts, such as the implementation of the Electronic Transfer Levy (E-levy), to raise enough money to reverse the deteriorating economic conditions, but none of these have been successful.
Only 10% of the anticipated money is being collected by the government’s Electronic Transfer Levy (E-levy), which was implemented to raise additional funds for the government.
Earlier this week, Gabby Asare Otchere-Darko, a prominent figure in the ruling New Patriotic Party, declared that the E-levy had underperformed because it had only produced 10% of the anticipated revenue.
Mr. Otchere-Darko said in a series of tweets that the e-levy has produced less than GH$60 million as opposed to the GH$600 million anticipated since its installation.
His announcement on Twitter read, “After 5 months of deadlock and bashing, the e-levy, after implementation, is delivering only 10% of estimated revenues; our revenues remain very low compared to the rest of the world; debt levels dangerously high; cedi, like most currencies, struggling against the US dollar.”
On April 2, 2019, Ghana formally ended an IMF program that had started in 2015.
Ghana turned to the IMF in 2015 for a nearly $1 billion extended credit-facility arrangement under the Mahama administration.
This came after years of excessive spending and a decline in the cedi’s value, which led to an increase in Ghana’s debt.
With a total public debt stock of GH 391.9 billion at the end of the first quarter of 2022, Ghana is dealing with comparable issues.
This equals a debt to GDP ratio of 78%.
The cedi has also underperformed other African currencies this year, falling 22% against the dollar.
Even though Ghana’s ruling New Patriotic Party claimed it was the last time the country would need a bailout from the IMF, recent data forces the nation to do so.
