Business News of 2014-04-08

‘IMF not the devil; Ghana must go for bailout if needed’

Financial Analyst, John Gatsi, says Ghana should go for financial bailout from the International Monetary Fund if that will help the country solve its economic woes.

“If IMF will come in and that will mean that we’ll actually overcome our problems very quickly and then plan to exit from IMF bailout or support, we should go for it,” he told XYZ News.

According to him, any such bailout from the Bretton Woods Institution is likely to come with virtually no conditionalities since Ghanaian Government is already implementing measures similar to such conditionalities.

“Of course some of the conditions the IMF impose on us; we are imposing the same things on ourselves already. We are taking away subsidies and we are talking about wage freeze etc. These are the things that the IMF normally imposes on us. We are not employing significant people into the public system now as a result of the austerity measures that we are adopting, so what is left for IMF to impose on us?”

Ghana might be making a case for a bailout from the Fund at the ongoing IMF/ World Bank Spring Meetings in Washington.

The cocoa and oil-rich West African country’s Finance Minister Seth Tekper has led a delegation to the meeting.

Ghana’s economy is currently experiencing some turbulent times with the local currency tumbling against the dollar and other major international currencies. The country also spends more than 70 percent of its tax revenue to pay about 650,000 employees in the public sector.

The Bretton Woods Institutions have had cause to complain about the huge amount of tax payers’ money doled out by the government to pay workers. It totals about Ghc9.2 billion.

The amount has been blamed largely for the spiraling budget deficit experienced in the past few years.

Ratings agencies like Fitch and Moodys have downgraded the country’s prospects and outlook several times in the past few months.

The IMF/WB Spring Meetings therefore present a crucial platform for Ghana to put in a request for help if the Government so wills.

Mr Gatsi says the Government of Ghana must avail itself of the bailout if necessary.

“I think Ghanaians shouldn’t be emotional. IMF is not the devil per se. It is our negotiation which is always weak many a times when we go to the negotiation table. IMF has helped us to come out of our economic woes before and when it becomes possible, IMF can still help us to come out of our economic woes.

Recently Iceland, Ireland, all these countries went to the IMF for bailout. They are out of it after three years. So Ghana is not an exceptional country. It depends on the way we utilise the packages and the kind of negotiations we go through,” he said.

Source: radioxyzonline
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