Planned IMF renegotiation: Mahama deserves commendation

Former President and now President-elect John Dramani Mahama has indicated that his government will make an effort to renegotiate the $3 Billion deal between the country and the International Monitory Fund (IMF). This decision is an indication that the experience of President Mahama will play an enormous role in the new government.

The conditions in the IMF deal have brought untold hardship to the good people of Ghana including government bond holders and pensioners who were compelled to agree to the Domestic Debt Exchange Program (DDEP). Both civil servants and the private sector bore the brunt of this agreement.

Renegotiating with the IMF is a smart economic approach for any new government inheriting a bad economy as ours, this has been done by other countries in the past, and it brought relief to their citizenry. For example, in 2015, Greece reconsidered its agreement with the IMF when the Syriza party came to power, and successfully renegotiated 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 now that the NPP is voted out of power, and the President-elect has hinted on this trajectory.

President-elect John Mahama has previously 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,". It is therefore refreshing to hear him reiterate the same stance after his victory in the just ended elections, it indicates his willingness to go for renegotiation in order to bring some relief to Ghanaians.

Due to the poor policies and economic mismanagement of the outgoing Akufo-Addo-Bawumia 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 heed to advice from the then opposition NDC, Civil Service Organisations and all other stakeholders. The level of arrogance which was displayed by the Akufo-Addo-Bawumia government was reprehensible, it is therefore not surprising that they suffered the heaviest electoral defeat after the 7^th December 2024 elections.

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 renewed 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 President-elect 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.

President Mahama has also previously noted that, his 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 refreshing how Ghanaians voted for a government which will bring a renewed hope in the eyes of the international community, the NPP did not have that quality, because all the mess were created under them leading to over sixty foreign companies leaving the shores of the country in the last two years. It is only a new government that will bring back hope among the international community and Ghanaians, no wonder Ghanaians have voted for the NDC to ensure the viability of this.