"IMF bailout won’t worsen our plight"

Vice President Kwesi Amissah-Arthur yesterday allayed the fears of Ghanaians that government’s application for a bailout from the International Monetary Fund (IMF) will attract conditions that could worsen their plight saying, the home-grown policies will not be abandoned.

The request for support, he said, did not amount to government abandoning its stabilisation and growth programmes in favour of conditionalities inimical to the growth of the national economy.

“We will effectively negotiate the IMF support programme for our mutual benefit,” he said; and ruled out the creation of any “fiscal space.”

Vice President Amissah-Arthur gave the assurance when he inaugurated the Implementation Advisory Group (IAG) for the implementation of the recommendations in the ‘Senchi Consensus’ reached at the recent National Economic Forum held at Senchi, in the Eastern Region, to discuss ways of salvaging the economy.

His remarks about the intervention of the IMF was in response to a question by Dr. Steve Manteaw, Co-ordinator of the Integrated Social Development Centre (ISODEC) as to what would happen to the ‘Senchi Consensus’ and government’s development agenda within the framework of IMF aid conditionalities, and as to whether the bailout would not lead to the creation of fiscal space.

The government recently sought IMF’s support for stabilising the economy, but the Vice President indicated the IMF support would be negotiated to operate within the framework of the national development agenda, including the implementation of the ‘Senchi Consensus’.

“I don’t agree that it will lead to the creation of fiscal space,” he said; adding that negotiations with the IMF, expected to start in a few days, would also be based on the timelines the government had already developed.

Fiscal space is the creation of room in a government´s budget that allows it to provide resources for a desired purpose without jeopardising the sustainability of its financial position or the stability of the economy.

This takes the form of raising taxes, securing outside grants, cutting lower priority expenditure, borrowing resources from outside sources or borrowing from the banking system, thereby expanding the money supply, but done without compromising macro-economic stability and fiscal sustainability.

Vice President Amissah-Arthur asked the group to vigorously implement the ‘Senchi Consensus’ for the benefit of Ghanaians, reminding it of the need to quickly restore the credibility of the macro-economic regime and solve the economic problems in a timely manner.

“We need to swiftly move into action to implement the arrangements we have all agreed on,” he said.

He described the ‘Senchi Consensus’ as the beginning of a process to strongly stabilise and grow the national economy, adding that the government’s recommendations had been fused into its development agenda.

The IAG, operating under the National Development Planning Commission (NDPC), has a 20 member-institutional representation from its members, the Office of the President, the Ministries of Finance, Trade & Industry, Food & Agriculture, Energy & Petroleum, Local Government & Rural Development and Lands & Natural Resources.

Others are the Ghana Revenue Authority, the Controller and Accountant General’s Department, the Bank of Ghana, the Trades Union Congress, the Private Enterprise Federation and the African Centre of Economic Transformation.

The rest are the Ghana Employers Association, the Association of Ghana Industries, the Institute of Economic Affairs, the Centre for Policy Analysis, Institute for Democratic Governance and the Integrated Social Development Centre.

Dr. Regina O. Adutwum, Director General of the NDPC, in a welcome address, urged the group, under the chairmanship of Dr. Nii Moi Thompson. Senior Presidential Economic Adviser, to deliver on its mandate.

Dr. Thompson, for his part, said a matrix had been developed to drive the implementation of the recommendations over a two to three-year period, noting that monitoring mechanisms were in place to ensure the success of the process.