Economist challenges IMF's remarks on Ghana's economy

Adnan Adams Mohammed

A renowned economist has challenged the remarks by the International Monetary Fund's, that the economy is healthy, saying Ghana is likely to return to the IMF.

According to a team from the Breton Woods institution, led by Mr Carlo A.E. Sdralevich, which is in the country for Article IV Consultations said, Ghana’s economy remained stable and projected a 7 percent Gross Domestic Product (GDP) growth for 2019.

The fund made the disclosure at a meeting with the Finance Committee of Parliament as part of its mission last week. The discussions centred on macro-economic performance, revenue mobilisation, the financial sector clean up and matters bordering on the post-Extended Credit Facility (ECF) programme.

But contrary to the IMF's remarks, the Ghanaian economist has said, if the country continues to dwindling in its revenue, and debt continues to go up, it may be forced to subscribe to the IMF programme in the coming years.

“If we continue to realize this dwindling revenue over the years and it continues for about five years, I think we are not far from going to IMF again” Dr. Lord Mensah, Lecturer at University of Ghana Business School stated in an interview with an Accra base radio station.

 Mr. Mensah said Ghana has made a lot of investment in the bid to enhance revenue generation, but the effect is not visible.

“As a country we’ve done a lot of investment in a direction to enhance revenue generation. So I ask myself why is it that all this investment is not building up into the revenue generation. Is it because the investment has been done and there is a large effect that we expect to see in the future? So for me, I think that there are so many things that are not adding up in the economic indicators that we have in the country. That is why when IMF came they had to caution us as to how our debt is brewing in relation to the revenue that we are generating.”

Mr Sdralevich of the IMF noted that, the macro-economic situation in Ghana remained favourable and the projected GDP growth would be a reduction from the original 8.8 percent.

Nonetheless, he asked the government to be watchful about the country’s rising external debt.

Also, the Chairman of the Finance Committee of Parliament, Dr Mark Assibey-Yeboah addressing the media in Parliament disclosed that, the IMF had been impressed with the management of the economy after Ghana’s three-year ECF programme with the fund.

“Inflation is now at 7.8 per cent, and if you look at the trend over the past 13 months or so, it's not expected to rise,” he said.

The 12-day Article IV Consultations, which ended last week, were part of the fund's mandatory multilateral surveillance for all IMF-member countries.

They are the first Article IV Consultations since Ghana successfully concluded the four-year IMF-supported ECF programme in April.

The last IMF Article IV Consultations were held in 2017.

A statement put forward by the Ministry of Finance in connection with the visit of the IMF Mission said: “A typical IMF Article IV Consultation would have an IMF team of economists visit a country to assess economic and financial developments and discuss the country’s economic and financial policies with the government and central bank officials.

“IMF staff missions also often meet with some parliamentarians and representatives of business, labour and civil society. This is currently the stage we are engaged in with the IMF since Monday, September 30, 2019.”

“After these consultations, the IMF team reports its findings to IMF management and then present them to the Executive Board for discussion, which represents all of the IMF’s member countries. A summary of the board’s view is subsequently transmitted to the country’s government. In this, the views of the global community and the lessons of international experience are brought to bear on national policies,” it added.

Dr Assibey-Yeboah further disclosed that the IMF team also praised Ghana for the smooth nature in which it had undertaken the banking clean-up exercise.

"Regarding the banking sector clean-up, what I gathered from them was that the whole process had been smooth and it really amazed them,” he said.

“For you to resolve all these banks, microfinance institutions and savings and loans companies challenges within a short period and still have financial stability, those at the helm must be doing something fantastic. What they have achieved is amazing," he added.

The Ranking Member of the Finance Committee, Mr Cassiel Ato Forson, told journalists after the meeting that the team raised both positive and negative issues.