Business News of 2014-06-25

Go to IMF for bailout – Economist to gov’t

A senior Lecturer at the Economics department of University of Ghana, Dr. Eric Osei Assibey, has asked government to as a matter of urgency turn to the International Monetary Fund (IMF) for a bailout.

According to him, government’s attempts to stabilize the declining economy have still not yielded the needed results.

Government is still struggling to reduce the huge budget deficit and inflation has also sky-rocketed to 14.8 percent. International rating agencies have also predicted further decline of Ghana’s economy.

“…the currency [Cedi] will continue to deteriorate if we don’t result to the IMF to bail us out; to supply the needed dollars to balance the balance of payment,’’ he said.

Dr. Eric Osei Assibey in an interview with Citi News suggested that resorting to the IMF will help improve Ghana’s balance of payment situation, which according to him, is currently in crises.

“We have huge balance of payment disequilibrium, the imbalance is huge; we’ve recorded about 12 percent trade deficit which is putting enormous pressure on the country’s forex reserves. The buffer has depleted so low that it is very difficult for the country [Ghana] to actually meet any demand pressure on the currency [Cedi],’’ he explained.

Dr. Osei Assibey further stated that the closure of the shops and stores by GUTA will grind the economy to a halt.

‘’… most of these shops pay taxes and so if they are closing then it means that economic activities will slow down and slowing down means that their tax obligation will not be honoured,’’ he said.

Thousands of traders in the markets of Accra and Kumasi closed down their shops in protest against government’s inability to remove foreigners in retail trading from the markets.

He also advised that the decision by GUTA to close their shops is not the “panacea’’ to the problem.

“I think they should engage government directly, sit government down and give it some time lines, specific timelines as to how government should address their concerns,’’ he opined.