Government must reduce borrowing while abandoning all vanity projects - Bright Simmons on IMF

Government to commence talks with the IMF

Ghana waited too long to go to the IMF, Bright Simmons

It will take weeks to get an IMF staff agreement, Bright Simmons

Vice President of IMANI Africa, Bright Simmons, has called on the government to reduce borrowing to help reduce the money it spends on debt servicing at a time when conversations have begun with the International Monetary Fund.

Bright Simmons noted that Ghana took too much time to go to the IMF therefore some stringent measures need to be adopted.

He raised the concerns when the Ministry of Information announced that the government is taking steps to hold engagements with the IMF.

President Nana Addo Dankwa Akufo-Addo has authorized the Finance Minister, Ken Ofori-Atta, to commence formal engagements with the International Monetary Fund.

“This follows a telephone conversation between the President and the IMF Managing Director, Miss Kristalina Georgievs, conveying Ghana’s decision to engage with the Fund,” the statement explained.

“The engagement with the IMF will seek to provide balance of payment support as part of a broader effort to quicken Ghana’s build back in the face of challenges induced by the COVID-19 pandemic and, recently, the Russia Ukraine crises,” the statement concluded.

In a tweet, Bright Simmons made the following keynotes:

"1. Ghana waited too long to go to the IMF.

2. IMF doesn't like basket cases.

3. Ghana stubbornly refused to sign on to the DSSI. IMF will insist.

4. It will take weeks to get an IMF staff agreement.

5. Then the IMF Board has to agree.

6. So this is NOT a short-term option

7. The more broken an economy the longer the IMF negotiations.

8. Argentina's latest deal has been under discussion for 2 yrs now.

9. Zambia's for ~5yrs.

10. A Staff Agreement requires Ghana to accept facts it keeps resisting

11. Ghana will have to sign on to DSSI

12. So months.

13. In the meantime, it is critical to stem the bleeding.

14. Borrowing has to drop significantly to impact yields on existing & new debt.

15. That starts with abandoning ALL VANITY PROJECTS.

16. And a new attitude to highly wasteful spenders like the Electoral Commission.

17. Whilst the IMF announcement may have prevented another rating downgrade in the near term, any prolonged delay in securing an agreement may actually trigger a downgrade.

18. The fiscal situation is such that unless the deal leads to a debt restructuring, investors won't bite.”

Meanwhile, the government has been lauded for the step to engage the IMF on a possible IMF program.

SSD/FNOQ