Ghana Back to IMF as Economic Conditions Worsen

President of Ghana Nana Addo Dankwa Akufo-Addo

JEAN-FRANCOIS BADIAS/AFP

Africa News with Agencies

Ghana’s president, Nana Addo Dankwa Akufo-Addo, has authorized Finance Minister, Ken Ofori-Atta to commence formal engagements with the International Monetary Fund (IMF), to support the country’s economy.

A statement issued by the country’s information ministry said the order follows a telephone conversation between President Akufo-Addo and the IMF Managing Director, Miss Kristalina Georgieva, Graphic.com reported.

"At a meeting on June 30th, 2022, the cabinet indicated its support for the decision," the statement said on Friday, July 1.

"The engagement with the IMF will seek to provide a balance of payment support as part of a broader effort to quicken Ghana's build back in the face of challenges induced by the Covid-19 pandemic and, recently, the Russia-Ukraine crises".

Ghana heads back to the IMF just over three years after exiting the programme.

Ghanaians in recent months have been feeling the pinch of record inflation and the impact of the Russia-Ukraine war amid cuts in government spending to avoid a full-blown debt crisis.

State of economy

According to a report by Graphic.com sighted by Africanews, Ghana's economy grew by 3.3% in the first quarter of 2022 compared to the same period in 2021 and inflation surged to a record of 27.6% in May.

Aside from this, the country is also grappling with high debt and a depreciating currency, the cedi. A controversial tax on Electronic transactions (E-Levy) which was aimed at relieving some burden off the government is yet to generate any significant revenue.

There was a two-day protest in Accra this week over fuel price hikes, inflation and an economic downturn.

The Arise Ghana group said it wanted the government to cancel the Electronic Transaction Levy (E-levy) immediately and also take steps to reduce inflation and arrest the depreciation of the cedi to help bring relief to the Ghanaian people.

Ghana's IMF history

In April 2015, the country turned to the IMF for a $918-million loan to support its ailing currency and help stabilise the economy, according to a grahic.com report

IMF advisors, working with the government, developed a three-part programme to restore debt sustainability, strengthen monetary policy and clean up the banking system.

Ghana exited the IMF programme in December 2018, and during the 2019 budget presentation to Parliament, the Minister of Finance, Ken Ofori-Atta, assured the country that the government would back the IMF reforms with legal and institutional measures to ensure the irreversibility of the gains made so far.