Mahama to renegotiate IMF deal to bring relief

The intention of former president John Mahama to try and renegotiate the terms of an International Monetary Fund (IMF) bailout and boost local ownership of future oil and mining projects if he wins a new term in office in December is a welcoming news that will bring a lot of relief to the business community and the entire economy.

Given the current severe economic crisis that has made life unbearable for Ghanaians, it is refreshing to hear the former president disclose to Reuters that, if he wins the next election he will sit down with the IMF to find ways of easing things up for Ghanaians.

Renegotiating with the IMF is possible, in 2015, Greece enterd with IMF when the Syriza party came to power, and wanted to renegotiate the terms of Greece's bailout program with the IMF and European creditors. Another example is Argentina in 2019 when there was a change in government, the new government of Alberto Fernández successfully renegotiated the IMF agreement signed by the previous administration. There are other examples of IMF renegotiation, therefore there is hope for Ghanaians if the NPP is voted out of power in 2024, but keeping the NPP in power will mean there is no hope for any form of renegotiation, and we would have to be accustomed to the rigours of this hardship.

The former president stated that during his first tenure, “I have been in an IMF programme before, and I know that the IMF is not averse to sitting and talking and renegotiating issues,"

Due to the poor policies and economic mismanagement of the Akufo-Addo government, the country has defaulted on most of its $30 billion external debt in 2022 after the effects of years of overstretched borrowing. The government refused to head to advice from the opposition NDC, Civil Service Organisations and all other stakeholders.

In May 2023, the government secured a bailout of $3 billion using the Gold, oil and cocoa producer, the government also reached a separate agreements with bilateral commercial creditors in June this year to restructure its debts and freeze repayments until 2025. This implies that, the next government will face some challenges unless it has good renegotiations skills and goodwill from the external creditors.

Clearly, the international creditors can only have renew hopes and goodwill for John Dramani Mahama and not Dr. Bawumia, because the latter is part of the current government which created the mess. The IMF has already disbursed $1.56 billion with another $360 million due by December. But Mahama said he would seek additional IMF funds to help Ghana resume the debt repayments.

The former president is also planning to amend a public finance management law to introduce a compulsory debt-to-GDP ceiling of 60-70% to prevent excessive borrowing as witness under the current Akufo-Addo-Bawumia government.

The NDC flagbearer further stated that, hid government will respect existing production contracts with oil and mining companies and not seek to raise taxes, but rather aim for higher royalties from future projects. "I think we are at the upper range of taxes on profit ... But I do think that in some cases the level at which we locked in the royalties is low."

After the current economic mess, it is important for Ghanaians to vote for a government which will bring a renewed hope in the eyes of the international community, the NPP does not have that quality, because all the mess were created under them leading to over sixty foreign companies leaving the shores of the country. It is only a new government that will bring back hope among the international community and Ghanaians.