Organized Labour is interested in how IMF money will be applied – GFL

Abraham Koomson, Secretary-General of the Ghana Federation of Labour (GFL), says Organized Labour, and all Ghanaians, are interested in how the Government will utilise the three-billion-dollar loan facility from the International Monetary Fund (IMF).

Ghana received approval from the IMF for a three billion US dollar bailout last Wednesday, May 17th, and on Friday, May 19th, the first disbursement of 600 million dollars hit the accounts of the country, which was expected to be released in tranches.

Koomson, reacting to the IMF Board approval, told the Ghana News Agency that workers were not much enthused about the approval but rather were interested in its application as that would have an effect on them.

He said they doubted whether the bailout would be beneficial to the public, as the conditionality attached to such bailouts often brought hardship rather than comfort to the people.

“It won’t impact positively on the fortunes of workers; the hardships are going to worsen, and it will erode the gains that the unions have fought for over the years,” he added.

He stated, for instance, that the introduction of the three new excise duties, even though there were over 17 taxes companies were paying, was an indication of what lay ahead for companies and workers with approval.

Koomson urged the economic management team of the Government to be forthright with the people on the conditionality and its implications instead of being evasive on the matter.

Meanwhile, IMF Press Release No. 23/151, titled “IMF Executive Board Approves US$3 Billion Extended Credit Facility (ECF) Arrangement for Ghana,” obtained by the Ghana News Agency in Tema, stated that the authorities’ economic programme, supported by the ECF-arrangement, builds on the government’s Post COVID-19 Programme for Economic Growth (PC-PEG).

The PC-PEG aims to restore macroeconomic stability and debt sustainability and includes wide-ranging reforms to build resilience and lay the foundation for stronger and more inclusive growth.

According to the IMF, large external shocks in recent years have exacerbated Ghana’s pre-existing fiscal and debt vulnerabilities, resulting in a loss of international market access, increasingly constrained domestic financing, and a reliance on monetary financing by the government.

“Decreasing international reserves, Cedi depreciation, rising inflation, and plummeting domestic investor confidence eventually triggered an acute crisis.

“The authorities have taken bold steps to tackle these deep challenges, including by accelerating fiscal adjustment.

“The government has also launched a comprehensive debt restructuring to address severe financing constraints and the unsustainable public debt.

“Securing timely debt restructuring agreements with external creditors will be essential for the successful implementation of the new ECF arrangement,” the statement stated.

Key policies under the authorities’ programme include large and frontloaded fiscal consolidation to bring public finances back on a sustainable path, complemented by efforts to protect the vulnerable.

The adjustment effort will be supported by ambitious structural reforms in the areas of tax policy, revenue administration, and public financial management, as well as steps to address weaknesses in the energy and cocoa sectors.

Appropriately tight monetary and exchange rate policies will help bring inflation back to single digits and rebuild international reserves. The programme also has a strong focus on preserving financial stability and encouraging private investment and growth.

The programme would help Ghana overcome immediate policy and financing challenges, including through its catalytic effect in mobilizing external financing from development partners and providing a framework for the successful completion of the ongoing debt restructuring.