Former finance minister Seth Terkper has said government’s move to go for a programme with the International Monetary Fund (IMF) might delay if figures presented to the Fund are doubtful, hence his push for transparency.
According to Mr. Terkper, who himself supervised execution of an IMF programme in 2015, the IMF will only be willing to assist a government when it is convinced of the numbers presented as it wants to see any programme agreed upon work to fruition.
However, he feels government has long presented figures which do not reflect the true nature of the economy – buttressing this assertion with the recent downgrades by global agencies Fitch and S&P’s; saying if figures churned out by government are anything to go by, such terrible downgrades would not happen. Mr. Terkper is therefore, calling for transparency of data with the IMF to hasten approval of the programme.
“Countries going to the IMF are similar to patients in a hospital – treatment will not be the same. After assessing the situation, some will need surgery while others will just be treated and discharged. Some cases may also be emergencies. But if you are sick and you go to the doctor and you lie about your situation, the doctor will prescribe a treatment – but in the end it won’t work and you will be exposed.
“In this case, the IMF is the doctor and government is the patient. Government needs to be transparent with the Fund, or else it will make the treatment take longer. Our case is serious, and we must acknowledge this so we can get assistance early enough. This will bring back some confidence in the economy,” he said in an interview with the B&FT.
Enhanced Domestic Programme
The Enhanced Domestic Programme (EDP), according to the finance ministry, is a three-year fast-tracked macroeconomic stabilization programme that seeks to restore investor confidence and achieve fiscal and debt sustainability. The programme, it adds, is heavily-driven by a mix of robust structural reforms and revenue, expenditure and financing policies. This will further enhance the recovery and transformation efforts by government under the Ghana CARES ‘Obaatan pa’ Programme.
The proposed programme should span a minimum of three years and seeks to achieve the following objectives: strengthen government’s efforts to restore investor confidence in the economy, thereby regaining market access, boosting development partner disbursements and unlocking other financing sources; restore debt sustainability and macroeconomic stability to support green growth, economic transformation and job creation while protecting social spending.
It will also strengthen the central bank’s monetary policy regime; build buffers to strengthen resilience to economic shocks; and further enhance the recovery and transformation efforts by government under the Ghana CARES ‘Obaatan pa’ Programme.
Government has given three main reasons to justify its proposal to go for what is called an Enhanced Domestic Programme with the IMF. The first reason, government says, is the confluence of shocks from the COVID-19 pandemic and Russian-Ukraine war. These two factors, the finance ministry said, have resulted in rising debt and erosion of buffers, worsening financing conditions, high inflation, and exchange rate and balance of payment pressures.
The second reason, the ministry adds, is balance of payments support. It said the Fund will offer concessional or cheaper financing to shore-up international reserves, stabilise the cedi and continue smooth payments for imports and restore conditions for strong economic growth (including support for government flagship programmes), while correcting underlying problems.
And lastly, government said, its programme with the Fund will provide a catalytic effect for accessing additional financing from third parties (friendly sovereigns/commercial creditors); including resuming international capital market access soon, and facilitating credit rating upgrades.
