Economist: IMF Won’t Solve Ghana’s Economic Problems

Steve Hanke, an economist at Johns Hopkins University is doubtful that the International Monetary Fund (IMF) will be able to solve Ghana’s economic issues.

Ghana’s Information Ministry announced President Nana Addo Dankwa Akufo-Addo authorised the Finance Minister, Ken Ofori-Atta to commence formal engagements with the International Monetary Fund to support an economic programme on July 1, 2022.

A delegation of officials from the IMF arrived in the country on June 5 and began an in-person meeting with Ghanaian authorities on June 6, 2022, which ended on July 13, 2022.

The IMF, after that promised to assist Ghana after the formulation of an Enhanced Domestic Program that could be supported by an IMF arrangement.

Ghana is currently saddled with a “severe” fiscal and debt situation, galloping inflation, cedi depreciation, credit rating downgrades, capital outflows, loss of external market access, and rising domestic borrowing costs, compelling the government to go in for an IMF programme.

Speaking at a ceremony at the Jubilee House to mark the appointment of ten envoys, the president of Ghana said the country’s run to the IMF was for a short-term repair to the ravaged finances of the country.

But Hanke believes the IMF won’t be the solution to these problems and rather suggested the establishment of a currency board.

“An IMF bailout will not solve #Ghana’s economic problems. I measure inflation in GHA at a stunning 51%/yr, and Ghana ranks 2nd in the countries most likely to default on their debt, according to Bloomberg. GHA needs to mothball its central bank & install a #CurrencyBoard.”

Although a currency board has been suggested by many, it has been kicked against with the justification that it didn’t work for the country in the past.

Source: opemsuo.com/Hajara Fuseini