Country To Request IMF Bailout After 17 Previous Failed Loans
Ghana’s president announced his intention to request a loan from an international lending organization for the 18th time, even though the previous 17 attempts failed to stabilize the economy, according to experts.
President Nana Akufo-Addo said a bailout from the International Monetary Fund is “necessary to restore public finances” as Ghana struggles through aftereffects of the COVID-19 pandemic and the ongoing global economic downturn, Africa News reported Thursday. Ghana has negotiated 17 IMF arrangements since membership in the organization, according to the IMF website, but analysts warn the economy is still teetering on the edge of default, according to Al Jazeera.
“Ghana’s Pres. Akufo-Addo says an IMF bailout is ‘necessary to restore public finances.’ SPOILER ALERT: None of Ghana’s previous 17 IMF bailouts restored anything. They all failed,” Steve Hanke, an economist and professor at Johns Hopkins University, said on Monday.
Ghana’s inflation rate has skyrocketed and its balance of payments deficit in the first quarter of 2022 has doubled over last year, according to Al Jazeera.
“We have decided to seek the collaboration of the International Monetary Fund (IMF) to repair, in the short run, our public finances, which have taken a severe hit in very recent times as a result, whilst we continue to work on the medium to long-term structural changes that are at the heart of our goal of creating a Ghana Beyond Aid, that is building a resilient, robust Ghanaian economy,” said Akufo-Addo in a statement Friday.
Ghana has almost $2 billion in outstanding IMF loans, according to data from Trading Economics, a growing number since a global drop in petroleum prices in 2015 slashed Ghana’s fuel export revenues, according to the CIA World Factbook.
In March, Ghana implemented an “E Levy” tax on electronic transactions that sparked broad public pushback, according to Africa News. Akufo-Addo had promised that the tax would ameliorate Ghana’s economic difficulties and keep it from having to seek IMF assistance.
In this week’s inflation table, #Ghana takes the 10th place. On July 7, I measured Ghana’s #inflation at a stunning 47%/yr-almost 2x the official inflation rate of 28%/yr. pic.twitter.com/o5fvhu4hM8
— Steve Hanke (@steve_hanke) July 11, 2022
Protesters flooded the streets in June, a response to the increasing economic hardship, Al Jazeera reported. Fuel prices for Ghanaians doubled from 2021 to 2022 and the cost of imported agricultural products, including Russian grain on which Ghana relies heavily, has skyrocketed, Reuters reported.
IMF representatives visited Ghana to discuss terms of a new loan, according to an IMF statement dated July 5.
In #Ghana, hundreds participated in the two-day protest led by local lobby group #AriseGhana. The protesters are up in arms about Ghana’s spiraling inflation. Today, I measure inflation in Ghana at a stunning 49.35%/yr. Take a look at the protest:pic.twitter.com/hnS2UyD7O8
— Steve Hanke (@steve_hanke) July 1, 2022
Hank Greene, the IMF and the Ghanaian Ministry of Finance did not immediately respond to the Daily Caller News Foundation’s request for comment.
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