The International Monetary Fund (IMF) says, Ghana government’s policy of ‘’Ghana Beyond Aid’’ could be a way out of the economic crisis occasioned by the COVID-19 global health pandemic.
The Bretton Woods institution says, the pre-pandemic strong economic foundation of Ghana has been shaken by the economic fall-out of the global COVID-19 health pandemic. It also adds that the economic impact of the current public health crisis on Sub-Saharan Africa in general is worse than the 2009 global economic meltdown.
It says one way out of the economic crisis is policy recalibration. This was contained in a virtual press conference addressed by Abebe Aembro Selassie, director of the Africa department of the IMF on October 22 2020.
The international money lender said although Africa maybe the least affected by the Corona Virus pandemic in terms of infection and death rates, the economic effects are more devastating to Sub-Saharan Africa compared to the rest of the world due to its dependence on foreign aid and foreign direct investments. It says Africa faces a budget-financing gap of about USD 290 billion over the next three years.
‘’The crisis, this time, has come through many, many different channels, and really is a much more pronounced one than in 2009, coupled with the fact that many countries have limited fiscal space, limited additional debt-bearing capacity. That has complicated the policy response that policymakers are facing, and is calling for much more of trade-offs and much more difficult policy discussions, internally’’.
The IMF used the October event to provide update on how the COVID-19 public health crisis is impacting the region, the economic outlook, and the policy challenges that they foresee in the coming months and years.
On Ghana, the IMF says, the country faces very significant challenges on its economy. ‘’You know, — after the difficulties of 2014-’15, there had been a period of quite strong reforms and consolidation, and was on a reasonably good trajectory, but, of course, the pandemic has come and really shaken the foundations of Ghana’s economy, as it done in other countries’’, Mr. Selassie pointed out.
He continued, ‘’This year, the policy response has been very supportive, as needs to be the case, but, you know, going forward, it will be very, very important to make sure that policies revert back to making sure that there is a — much more of a focus on keeping debt stable and bringing it down gradually.’’
The IMF thinks whether or not Ghana overcomes the economic impact of COVID-19 will depend on how quickly economic policy recalibration takes place. It says, given how high debt levels are in Ghana, the quicker the government goes into policy recalibration the better for the economy.
‘’Effecting those reforms will be of paramount, paramount, paramount importance for Ghana’’ director of the Africa department of the IMF emphasized.
Despite the economic challenges, the IMF says, Ghana government policy of ‘’Ghana Beyond Aid’’ could prove to be one way out of the economic crisis occasioned by COVID-19.
‘’We’ve been saying this, you know, it’s really important and we strongly support the government’s vision of, as the President has been saying, ‘’Ghana Beyond Aid’’. That’s absolutely the right vision, and, of course, that aid has to be replaced by tax revenues and other permanent domestic sources of financing, rather than debt, and so, effecting that transfer is really what’s going to be key, and we’ll be working with the government, through the Article IV process, to provide technical advice, whatever the government needs’’.
Here is a quick glance of the IMF projections on Ghana:
- 2020 Projected Real GDP (% Change): 0.9
- 2020 Projected Consumer Prices (% Change): 10.6
- Country Population: 30.779 million
- Date of Membership: September 20, 1957
- Outstanding Purchases and Loans (SDR): 1479.65 million (September 30, 2020)
- Special Drawing Rights (SDR): 39.6 million
- Quota (SDR): 738.0 million
- Number of Arrangements since membership: 16
Story By: Sacut Amenga-Etego