IMF boss’ caution to Ghana over dealings with private creditors apt – Gatsi

The Dean of the Business School of the University of Cape Coast, Professor John Gatsi, has said the cation that the Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva gave to Ghana in the dealings with private creditors, is apt.

The IMF Boss is cautioning Ghana to be mindful in its dealings with its private creditors, warning that a terrible agreement could derail gains made under the programme.

Despite completing a domestic debt restructuring programme the nation is yet to conclude talks with some of its private creditors as part of the $ 3 billion support.

Speaking at a meeting with President Akufo-Addo, Madam Georgieva said “Don’t let the erobond creditors twist your arm. Why? because yu have done a very painful domestic debt restructuring to be able to be here, you have agreed on in principle debt restructuring with officials creditors of Ghana under certain conditions, the deal with the Eurobond has to be a fair deal otherwise we risk to see what happened in Zambia where, in October I thought  the deal was done  then the private sector twisted Zambia’s arm  and they tried to give them a better  deal  than the official creditors, they didn’t put their foot down and Zambial lost  a lot of time  so that is my reflection.”

She added “I would like to share with you two thoughts, the first one is on the critical time for Ghana and the world economy that I had the privilege to be here with you. For Ghana, because the country is coming from a difficult period of high debt, fiscal deficit from the covid shock, and shock from the Russian-Ukraine war but also because, like many countries, Ghana did not appreciate the size of the shock”.

“In an election year, the country must be more than fiscally disciplined to sustain its position. The main lesson from this experience is that you do the right thing now to build the strongest possible foundation for growth for Ghana”, she mentioned.

Speaking on this issue with Beatrice Adu on the mid-day news on 3FM Monday, March 18, Prof Gatsi said ” it is also apparent that perhaps Zambia’s situation is such that the country could have done better to cling a deal that is more in the interest of the country than what happened to them.

“So I believe it is just the use of the Zambia case to provide advice and caution to the government of Ghana especially as the government of Ghana wants to do everything possible to tell everybody that they have cling a deal. So I think it is in the right direction for such a warning to be given.”

Meanwhile, Finance Minister Dr Mohammed Amin Adam has assured the Managing Director of the Fund of the government’s commitment to work closely with the Bank of Ghana (BoG) to stay the course and not deviate from the IMF programme.

“We will justify the trust and confidence you have in Ghana,” he told the IMF boss who is in Ghana for a working visit.

Madam Kristalina Georgieva noted in a subsequent interaction with President Akufo-Addo, that it is clear to the IMF that confidence in the Ghanaian economy both domestically and externally is bouncing back.

She observed that the world economy has surprisingly remained resilient and its growth rate has been stronger than predicted.

“For Ghana this year cannot be more decisive because it is the year to bring [back] confidence in Ghana domestically and internationally at the level it was before [the global economic challenges] or higher.

“It is possible because we are seeing a world economy that is slightly better, so the economy attitudes are better and the critical resource of money will go where confidence in the capacity of the country to perform is highest so Ghana can be at this place as it was before” Kristalina Georgieva said this when she and her delegation called on President Akufo-Addo as part of her two-day visit to Ghana,

“We need to stay the cause, your growth is better than expected, your inflation is lower than expected, the progress in debt restructuring has been faster than expected and the task now is to cement what has been achieved” Madam Georgieva added.

President Nana Addo Dankwa Akufo-Addo for his part touted the success of the deal between Ghana and the International Monetary Fund (IMF) for the $3 billion facility.

He said his administration will continue to implement sound economic policies and stay the cause with regard to the current IMF programme the country is executing.

“It is obvious that the decision we made in July 2022 to come and seek your support for the difficulty economic circumstances which we were involved as far as I am concerned is a decision that has already paid off. It has paid off in terms of the clear turn around that we are seeing in our economy.

“The very dire circumstances in which we were at the time we took that difficult decision and where we are today is a very clear testimony of the fact that our decision to seek your support was a decision that was correct and we have had very positive benefits from it” President Akufo-Addo remarked.

“The stronger than predicted growth, the systematic decline in inflation in Ghana and the decline of interest rates, the relatively stable exchange rate which we have had for our currency which was deeply troubled at one stage; These are all important signals that our economy is stabilizing.

I believe that it is the cooperation that we have had from you and the association that we have had from the World Bank that has brought us to this point. That is a rescue mission and the more important matter for us now is that having laid the foundation, how we can now engineer the rapid growth which is the way in which the mass of our people can benefit from the development of our nation” President Akufo-Addo further remarked.

Ghana secured a 3 billion United States dollars IMF extended credit facility (ECF) in 2023 after President Akufo-Addo on 1 July 2022, authorized the Minister of Finance then, Ken Ofori-Atta, to commence formal negotiations with the IMF to secure a balance of payment support as part of broader efforts to quicken Ghana’s build back in the face of challenges induced by the COVID-19 pandemic and the geopolitical armed conflict between Russia and Ukraine.

Ghana’s three-year-IMF programme is in its first year of implementation, with the nation so far, receiving a total of 1.2 billion United States dollars from the IMF in two payment tranches of 600 million dollars each. Ghana has also completed negotiations with her external creditors and there are ongoing discussions with her external private creditors.

 

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