Business News of 2014-08-05

'IMF will demand structural reforms for bailout'

Economist and Analyst, Kofi Arkaah, is predicting that the International Monetary Fund (IMF) will demand a rationalization of Ghana’s wage bill among other structural changes as part of the bailout programme to Ghana.
According to him, the IMF would only offer assistance when the necessary structural programmes are addressed.
“For example they [IMF] will not provide any financing if the wage bill is not addressed. I can promise you that, it doesn’t matter if you are getting financing for that wage from somewhere else; they will not”, he said.
Speaking on the Citi Breakfast Show on Monday Mr. Arkaah noted that government has to definitely take a decision on the wage once Ghana is on the IMF programme.
In 2013, Ghana’s wage bill accounted for around 70 percent of government’s tax revenue.
Government has already hinted that it plans to reduce the public sector wage bill to 35 percent of government revenue for the next three years to restore macroeconomic stability.
“The government wage bill is just too high,’’ he added.
Mr. Arkaah said the bailout programme will also consider the budget overruns mostly in election years.
He further stated that the removal of the fuel subsidies was on the advise of the IMF. “… the only [home grown solution] implemented is the removal of fuel subsides which actually came from the IMF,’’ he said.
"…I haven’t seen anything that has been home grown,’’ he reiterated.
The economist opined that in the current economic crisis it is ‘’prudent’’ for Ghana to sign up for an IMF programme but noted that announcing you are going to the IMF won’t stabilize the Cedi. ‘’It will stabilize if we industrialize,’’ he suggested.
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