IMF Concludes Bail Out Visit to Ghana: Admits Ghana’s Fiscal and Debt Situation Worsened By COVID-19

IMF Concludes Bail Out Visit to Ghana: Admits Ghana’s Fiscal and Debt Situation Worsened By COVID-19

  • An IMF team that arrived in Ghana to begin engagements with government following its request for a bail out programme has concluded its mission
  • The team says Ghana was facing severe economic challenges because of the Covid-19 pandemic and global shocks due to the war in Ukraine
  • The IMF says it will continue monitoring Ghana's economy while the country develops a domestic programme that will inform the bail out deal

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A team from the International Monetary Fund (IMF) that arrived in Ghana to assess the economic situation and discuss a possible bail out deal has ended its mission.

Finance Minister, Ken Ofori-Atta
Finance Minister, Ken Ofori-Atta. Source: Facebook/Parliament.of.Ghana
Source: Facebook

The team led by Carlo Sdralevich visited Accra between July 6 and July 13, 2022, to, among other things, discuss Ghana’s Enhanced Domestic Programme that an IMF lending arrangement could support.

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In a release dated Wednesday, July 13, 2022, the IMF team explains that during the meeting, it held discussions with Vice President Bawumia, Finance Minister Ofori-Atta, and Governor of the Bank of Ghana, Dr Ernest Addison.

The team also met with the Parliament’s Finance Committee, civil society organisations, and development partners, including UNICEF and the World Bank.

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In the press statement, the IMF team leader, Mr Sdralevich noted that Ghana was facing a challenging economic and social situation amid an increasingly difficult global environment.

“The fiscal and debt situation has severely worsened following the COVID-19 pandemic. At the same time, investors’ concerns have triggered credit rating downgrades, capital outflows, loss of external market access, and rising domestic borrowing costs,” he observed.

He said the global economic shock caused by the war in Ukraine was also hitting Ghana when the country is still recovering from the Covid-19 pandemic shock and with limited room for manoeuvre.

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“These adverse developments have contributed to slowing economic growth, accumulation of unpaid bills, a large exchange rate depreciation, and a surge in inflation,” he analysed.

He said the IMF would monitor the economic and social situation closely and engage in the coming weeks with the authorities for the Enhanced Domestic Programme.

“We reaffirm our commitment to support Ghana at this difficult time, consistent with the IMF’s policies,” Mr Sdralevich.

US Economist Steve Hanke predicts an IMF programme won't save Ghana's economy reported in a previous story that US economics professor, Steve Hanke has said the decision by the government of Ghana to turn to the IMF for a bail out will fail.

According to the international economist at the John Hopkins University, USA, Ghana's request for financial assistance from the IMF to correct balance of payment distortions not will help the troubled economy.

"In a last ditch effort, the govt. has begun negotiations w/ the IMF on a bailout deal. SPOILER ALERT: Another IMF loan won't save GHA's economy. Like its past 17 IMF programs, a new one will fail," he tweeted over the weekend.

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