An associate professor of finance at Andrews University in the USA, Williams Kwasi Peprah, has maintained that Ghana’s extended credit facility deal with the IMF is not enough to make any significant economic impact.
He believes that the conditionality and the policy demand from the IMF to mitigate Ghana’s fiscal and debt vulnerabilities are drastic and need a long-term approach to stem the tide.
The finance expert, who was speaking on the sidelines of a public lecture at the Christian Service University College in Kumasi, has proposed a five-to-seven-year programme for effective financial turnaround for the country.
“In my perspective, the three years will not solve the problem. We should have gone for probably a five-to-seven-year programme with the IMF. What I am envisaging is that, by the end of the three-year programme, the government will be putting in another programme for IMF to help us. This is because, from the document given by the government, by the time the programme ends in 2026, we will still not be financially sustained. We will have to still go in for another program.
So, we could have gone in for a longer-term programme. I don’t know why the government opted for three years. But, from the data I am seeing, a five-to-seven-year programme is the best to be able to turn the situation around,” Peprah said.
He asserted that all economic indicators, including debt-to-GDP ratio and external debt loan repayments in 2019 proved that Ghana was already in debt distress, and thus, seeking a bailout at that moment would have normalized the situation before now.
The finance expert said, “We should have gone to IMF in 2019 because, by then, all the economic indicators proved that we were already in debt distress… If we had taken the decision to be in the IMF programme in 2019, the situation would have normalized.”
The IMF extended credit facility of US$3 billion was approved by the Executive Board on 17 May. The programme will support Ghana in creating conditions for inclusive and sustainable growth. Sections of Ghanaians have raised concerns about harsh conditionalities for Ghana’s deal with the IMF.
Peprah is, however, optimistic that a continuous plug and cooperation with the IMF to monitor Ghana’s financial operations will encourage stability and financial discipline by the government.
He asserted that, “When IMF is around like a policeman, we tend to do the right thing. It is prudent, and history has shown us that anytime we have IMF in our governance system, our inflation rate reduces. If your inflation drops, the economy becomes stable, businesses will be able to go on well and employment will increase. That is what we are all hoping for.
“There has been the blame that in academia, we have been keeping quiet and not contributing our quota to national discourse. So, the purpose of this lecture is to contribute knowledge to help the country find a way to find our financial sustainability.”
The public lecture was dubbed: “Ghana, the fallen angel shall rise: Lessons from the IMF bailout.”
Reporting by Paulina Serwaa Gyamfi in the Ashanti Region
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