The International Monetary Fund has identified five major threats to Ghana’s ongoing macro-economic recovery and has assessed both the likelihood of their actually coming to pass, and the dire effects if they do.
Equally importantly, the Fund has provided an array of recommendations that need to be implemented to avert them where possible or ameliorate their effects where they cannot be averted.
Instructively, Ghana has already started implementing many, if not most of those recommendations, even though it is not under any obligation to do so, since the country is no longer engaged in an IMF supervised programme.
We believe this should put to rest most of the worries expressed by the international investment community over the past few months, that a Ghana freed from the IMF’s shackles is likely to return to its old undisciplined and ineffectual ways.
Those worries have translated into net outflows of portfolio investments made by foreign investors into cedi denominated domestic debt securities and consequently have resulted in steep cedi depreciation and inevitably rising offered coupon rates on government’s debt instruments.
All this largely because of what is effectively a storm in a tea cup; simply put, Ghana has terminated the IMF programme, but not its underlying policies.
To be sure, the international investment community can be forgiven for jumping to the wrong conclusion about Ghana’s economic management post IMF programme. The incumbent government rode to power on the promise of replacing the IMF’s emphasis on demand management with a focus on expansionary supply side economic policy and indeed has already shown its commitment to this by targeting an expansion of the fiscal deficit in its very first budget outside of the Fund’s direct influence.
However, since then it has also shown its willingness to retain the fiscal prudence introduced by the IMF. For example, government is retaining the ban on net new public employment outside of the health and education sectors, with a view to keeping the inordinately high public wage bill in check.
Indeed, even as it is targeting a widened fiscal deficit, it has placed a legal cap on the fiscal deficit in any given year at five percent; although there are still widespread doubts as to its political will to adhere to this particular legislation in an election year.
This newspaper is charitable enough to hold the hope – indeed the expectation – that the Ghanaian state as a whole has learnt its lessons from its experiences in the run up to the IMF programme. It is instructive that even the profligate Mahama administration discovered the concept of fiscal discipline between April 2015 when the IMF programme started and the midway point of 2016, when it gave in to political exigencies due to the impending general elections.
The worries of the international investment community once again support our call for our political class to desist from political partisanship in its interactions with the rest of the world with regards to macro-economic management. The venomous accusations and counter-accusations of incompetence in economic management have fueled those worries unnecessarily, even as they cannot affect the electoral fortunes of any of the two parties since foreign investors cannot vote.
Ghana will not get its economic management policies spot on all the time – no country does. But we are confident that the country will not repeat its recent mistakes with nearly as much gusto as it did hitherto. We hope that going by economic policy in the immediate post IMF programme era, the international investment community will share our confidence.
