IMF ASSISTANCE TO GHANA IS A SHAM AND NOT A SOLUTION TO GHANA'S ECONOMIC CHALLENGES

Why a bailout now? Evidence has shown that most African leaders go for an IMF bailout because of dishonesty on the part of leadership and ignorance on the part of a large fraction of the African populace. Most often, African leaders accept IMF adjustment programmes and policies so that they can misappropriate and embezzle the external loans that come with the programmes and policies.

Ghana's current economic challenges is a problem of colonial and imperialist make-up. As a country going for a bailout out or financial rescue from the Bretton Wood institution is not the answer to solving our economic challenges because we have failed to radically transform and diversify our agricultural exporting economy. Since the fall of the First Republic,Ghana has consistently solicited and requested for so called expert advise from this multilateral institution and yet we have failed to ensure fiscal and monetary stability over both the medium and long terms. What is the essence of achieving financial stability over a short term and still be experiencing same financial crises and running to them again for so called IMF's assistance? to Ghana in helping it deal "IMF ASSISTANCE TO GHANA IS A SHAM AND NOT A SOLUTION TO GHANA'S ECONOMIC CHALLENGES".

Why a bailout now? Evidence has shown that most African leaders go for an IMF bailout because of dishonesty on the part of leadership and ignorance on the part of a large fraction of the African populace. Most often, African leaders accept IMF adjustment programmes and policies so that they can misappropriate and embezzle the external loans that come with the programmes and policies.

Ghana's current economic challenges is a problem of colonial and imperialist make-up. As a country going for a bailout out or financial rescue from the Bretton Wood institution is not the answer to solving our economic challenges because we have failed to radically transform and diversify our agricultural exporting economy. Since the fall of the First Republic,Ghana has consistently solicited and requested for so called expert advise from this multilateral institution and yet we have failed to ensure fiscal and monetary stability over both the medium and long terms. What is the essence of achieving financial stability over a short term and still be experiencing same financial crises and running to them again for so called IMF's assistance?

IMF as an institution,has failed in assisting Ghana in dealing with its economic turbulence over the years since all economic assistances have been based on the notion of a monetized economy as well as reducing inflationary rates as solutions in solving our never ending economic turbulence as a developing. This is evident in the names under which Ghana has implemented the so called assistance and they include Structural Adjustment Programme (SAP), Economic Recovery Programme (ERP), Growth and Poverty Reduction Strategy Papers (GPRSP) I and II and Programme of Action to Mitigate the Social Costs of Adjustments (PAMSCAS).

All these names refer to the same assistance given by IMF to Ghana and the objectives guiding these programmes have never changed. The major guiding principles used by IMF as ways of assisting Ghana include: restructuring and diversifying the productive base of the economy,achieving fiscal stability and positive balance of payments,minimizing inflationary growth or sustaining inflation at a minimum level,reducing the dominance of unreproductive investments in the public sector,adopting a realistic exchange policy,rationalizing and reducing state's role in the economy by continuous privatization and advocating for appropriate pricing policies through the removal of subsidies on utilities and fuel products.

If these are the guiding principles used by the Bretton Wood institution, IMF, why go back to IMF after few years of surviving without them? This is because most of the guiding principles are already being implemented locally as a nation such as increase of taxes,expansion of tax base,removal of subsidies on fuel products and continuous upward adjustment of prices of utilities. IMF's assistances have always been based on sustaining inflation and reducing the role of the state without thorough considerations on ways of facilitating rapid industrialization,creation of more and sustainable employments and reducing imports and increasing exports.

Since 1970, all the assistance Ghana has derived from IMF have been inflationary in nature because such assistances have always increased the amount of local currency used in purchasing a unit quantity of local goods and imports. After the First World War, Germany was subjected to mandatory financial rescue in the name of SAP to enable them pay war reparations and bring their economy back on track. One dollar exchanged for 4.2 marks in 1914 before the War. In 1920, one year into Germany's SAP, one dollar exchanged for 63 marks. The exchange rate fell with time, reducing the purchasing power of the German mark. One dollar exchanged for 2,000 marks in 1922. The mark was virtually eliminated in 1923; one dollar exchanged for 4.2 trillion mark. Every German was impoverished and disgraced. The impact of mandatory devaluation on Germany's economy should be viewed against the backdrop of Germany as a world power even at that time. What do we expect from the artisan-economy of Ghana, subjected to the same type of program?

About thirty countries in sub-Saharan are implementing programmes advocated by IMF and today they are experiencing increasing indebtedness and budget deficits,mass unemployment in all sectors. Such countries include Zambia, Tanzania, Nigeria as well as Ghana. Ghana under the late Atta Mills went to IMF for financial assistance to stabilize and support our economy and what did we get?, freeze on employment for three years and yet we have learnt anything?

Before Ghana went for a bailout from IMF for the first time, and started implementing certain policies and programmes as conditionalities for financial rescue, the Cedi exchanged ¢2.5 to one dollar but after years of implementing their programmes what was the result? By the end of 2000, a dollar to the Cedi was US $1=¢7348 showing a huge loss in the value of our local currency in the long term.

History has shown that the adoption of IMF policies and programmes as remedies to help salvage our economic woes has stability crises in our local currency, increased food prices,unbearable economic hardships,cost of education and health care skyrocketing and rapid decline in the availability of services in the rural areas. So soon we have forgotten that the cash and carry system adopted in our health sector by previous governments before NHIS was one of the policies advocated by the IMF in bettering or solving our deteriorated economy.

In 1987, Ghana under IMF assistance programme dubbed Economic Recovery Programme retrenched about 17,200 employees and Cocoa Marketing Board was expected to retrench about 46,097 people by end of December and poverty rate in Ghana increased. Again, Ghana through the implementation of the Programme of Action to Mitigate the Social Costs of Adjustments (PAMSCAD) in 1987 led government to increase wages of workers who were higher officials and froze the increment of wages of the majority of workers who were receiving lower wages therefore leaving the majority of low level workers poor because prices were going up whilst their wages were static;government also froze promotions and new appointments leading to social unrest and sometimes workers going on strikes therefore reducing hours of productivity and in the long round affecting the nation's economic growth and productivity.

Our economic challenges as we face currently could be solved internally without seeking IMF assistance because corruption alone has costed the nation in the past two decades over $5 billion with just 2010-2013, costing the nation a whopping $1.1 billion according to the Auditor-General. Again,we need to also correct our trade deficits as a country by adopting import substitution mechanisms,reduction of imports and increasing exports,government must also take the conscious efforts of reducing budget deficits and spending within budgets because increase of government's budget deficits causes real interest rates to go up thus affecting businesses ability to borrow and,quotas ought to be implemented in regard to certain goods and services if they could be provided in Ghana. The state ought to also make deliberate efforts in providing jobs as well as facilitating conditions to help the private sector grow by reducing taxes but expanding the base,ensuring constant supply of power to help industries to thrive.

Author: Nyarko Abbam John.