By 2015, Ghana’s economy was in trouble, hobbled by widening current account and budget deficits, rampant inflation, and a depreciating currency.
Credit dried up as interest rates rose and banks’ bad loans piled up.
At the root of Ghana’s woes was out-of-control government spending.
Ghana had 7 days of import cover before requesting for IMF support in 2014.
When Ghana officially requested the Fund support on August 8, 2014, the cedi had depreciated by 40%.
Inflation was in the double-digits.
Interest rates stood at around 24–25% on domestic debt.
Bank of Ghana only had around 7 days’ worth of imports in net foreign exchange reserves, equivalent to $400 million.
Before exiting office, the NDC govt met only 1 out of 11 conditionalities forcing extension of the programme.
The NPP govt has to work to achieve the remaining conditionalities to complete the and exit the programme by April 2019.
The programme
In early 2015, Ghana turned to the IMF for a $918 million loan to help stabilize the economy.
IMF advisors, working with the Ghanaian government, developed a three-part programme
Restore debt sustainability.
The government limited hiring and wage increases and eliminated subsidies for utilities and petroleum products.
To raise revenue, it cracked down on tax evasion and rationalized exemptions.
New revenue sources included a tax on luxury cars and increased taxes on high earners.
It is NDC that mismanaged the economy.
NPP did a good job and if not for COVID-19 and the Russia-Ukraine war, Ghana will not be returning to IMF.
Source: MyPublisher24.com