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‘An IMF programme in 2nd quarter of 2023 is a bit too late for Ghana’ - Economist

Dr. Williams Peprah.png Dr. Williams Peprah is a financial analyst

Thu, 11 Aug 2022 Source: www.ghanaweb.com

If Ghana is not able to get an IMF intervention before the last quarter of 2022, the country may be headed toward a crisis. This is the position of an associate Professor of Finance at Andrews University (Michigan), Dr Williams Peprah.

The finance expert is urging the government to hasten steps to complete talks with the Bretton Woods institution in order to secure funds to primarily shore up the country’s foreign reserves.

His comments in a JoyBusiness interview on Wednesday are at the back of the current downgrade by S&Ps and Fitch ratings where the country’s creditworthiness was labelled as junk.

“The second quarter of next year probably will be a little bit too late for Ghana, because if we look at the data that was issued by Bank of Ghana, already the balance of payments is about -$2.4 billion, which is about 3.5% of our GDP. Our revenue generation internally is not picking up as expected because the E-levy has failed. So, if the fund delays the impact will be very dire for us as a country,” he said.

“I notice also that based on the report, the government is also a little bit slow in submitting this whole programme to the Fund. And this probably may be the reason why the fund will delay because initially it was anticipated that any amount that will be approved for Ghana should come in within the first quarter [2022]; because if you don’t get the funds coming in the first quarter, trouble,” he stressed.

Due to the reduction in investor confidence in the economy, some foreign investors are withdrawing their services. Dr Peprah said it should be another reason the government must make sure to secure the IMF funding as soon as possible.

“Already, there are a lot of claim payments by companies within the country; and then also government’s own commitment in terms of paying off [principal amount] some of the Eurobonds which will be due is a challenge,” he added.

He proposed that the Bank of Ghana must develop innovative strategies to encourage exporters to bring their monies to the country as it is experiencing a balance of trade deficit.

Again, he said “though the government is expecting first the $750 million to hit the Bank of Ghana’s account and then also the cocoa syndication loan of about $1.5 billion; and putting this together gives about roughly say $2.25 billion. It will not be enough because currently, we are already in a negative balance of $2.4 billion.”

“Probably, I’m expecting that maybe the Central Bank will come out with some measures to compel most of the companies that are involved in exports to bring in some of the monies that they keep outside the country. And you know in our laws, we allow free-zone companies and these multinationals who are involved in exporting products from Ghana to keep some of the funds here,” he added.

SSD/IA

Source: www.ghanaweb.com
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