The IMF as part of its obligations to members concluded its Article IV consultations with Ghana. The report has highlighted the overburdened debt stock with interest payments risks and described Ghana as a country with risky debt repayment capacity.
The IMF unlike government, explained that the impact of Covid-19 contributed to fiscal vulnerability with about 13.9% deficit and alarming public debt in 2021. The deficit in 2019 was 7.5% and -1.8 primary balance. Fiscal deficit in 2020 was 15.2% and projected to average 13.9% in 2021. Placing all the fiscal challenges on the impact of the Covid-19 pandemic is unacceptable. The report also painted fearful primary balance situation of -8.8 in 2020 and -5.9 for 2021.
The public debt situation has made Ghana admitted into the club of debt addicts with debt to GDP of 79% in 2020 and expected to end 2021 with 83%.
The situation has led to abandonment of social investment, worsened vulnerabilities, increased poverty with very low net international reserve without domestic fiscal buffers to manage debt and promote sustainable support for the population.
An assessment of the report shows, the IMF has shown empathy to the economy by moderating the choice of word to describe the economy. The IMF however, warned against unbridled financing of the deficit by the Bank of Ghana. Food price hike over the period projects the hardships and risk to livelihood.
The call for faster audit of Covid-19 emergency spending draws attention to transparency and responsibility.
The Article IV IMF report has pass the final verdict on the economy. The verdict is clearly that high food prices, reduction in debt repayment capacity of the country and above all Covid 19 is not the cause of the fiscal woes of the economy but contributed to already difficult economy.
The government was on the misleading assumption that fiscal responsibility can be suspended. Really, fiscal responsibility can only be adjusted. Respect for properly planned expenditure plan, investment in social needs of the people, showing transparency and account for Covid 19 financial plans.
Fiscal consolidation measures are inimical to comprehensive growth. There can be no sustainable solution to the current challenges when growth is still engineered by non-value-added mining, forestry , services and low productivity while entrepreneurs compete with government in the short term debt market.
Crisis management that piles all the responsibilities on citizens such as demanding all the revenue and sacrifice without commensurate sacrifice from government, only put citizens in fiscal bondage.