IMF $3bn Bailout: Joe Jackson urges govt to avoid reckless borrowing

The Director of Business Operations at Dalex Finance, Joe Jackson, is urging the government to refrain from excessive borrowing following the International Monetary Fund’s (IMF) $3 billion bailout for Ghana.

Speaking on Eyewitness News on Citi FM, Joe Jackson emphasized the need for the government to take a retrospective look at the activities that led to the economic crisis.

He stressed that the government should use the funds wisely and avoid reckless borrowing, as this would only worsen the economic situation.

Joe Jackson highlighted that receiving the bailout funds comes with the responsibility of ensuring proper utilization.

He cautioned against another spending spree and emphasized the importance of behaving responsibly to secure future tranches of the bailout.

“What this means is that, once we have taken the money, the behaviour that we have to undertake to ensure that this money is spent properly, has to kick in. We now have to make sure that we do the right thing. If anything at all, this is absolutely the wrong time to believe that we can be reckless in borrowing”.

He added, “This is the time you get prudent with your money. It’s not an invitation to go on another spending spree, it’s not the time to show your bad habits. If government doesn’t behave, it won’t get the 2nd tranche, talk less of the 3rd tranche. The whole world is watching to see how government will behave”.

He urged the government to learn from the current challenges and take measures to prevent reckless borrowing in the future.

“The programme is going to be for a few years, so I’m sure we will behave properly. We are so close to disaster this time, so close to total collapse that we have to learn our lessons. We need to ask ourselves the things we can do to prevent future governments from this reckless borrowing. How do we make sure that we don’t borrow and borrow until we can’t pay anymore? How do we make sure this does not happen again?” he emphasised.

Joe Jackson also called for a reduction in the size of government appointees and the elimination of ineffective State-Owned Enterprises draining the country’s resources.

The government sought financial assistance from the IMF due to various factors, including Ghana’s escalating debt situation, the impact of the COVID-19 pandemic, the Russia-Ukraine war, the banking sector clean-up, and excess capacity payments in the energy sector.

On December 12, 2022, the IMF reached a staff-level agreement with Ghanaian authorities on a new arrangement under the Extended Credit Facility.

Vice President Dr. Mahamudu Bawumia acknowledged the limited revenue generation options faced by the government amid the worsening economic challenges, leading to the decision to seek support from the IMF.

President Nana Addo Dankwa Akufo-Addo also expressed confidence in Ghana’s engagement with the IMF, stating that the deal would spur economic growth.

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