The structure of Ghana’s Extended Credit Facility (ECF) Programme with the International Monetary Fund (IMF) suggests a potential extension, according to economist and professor of finance, Professor Godfred Bokpin.
According to the finance professor at the University of Ghana, the pathway to restoring macroeconomic stability by 2026 with the current conditionalities would require an extension of the programme for the objectives to be achieved.
Moreover, the programme, he observed, did not provide the fundamental restructuring the country needed to not enter an IMF programme in future.
“If you look at the objectives and the adjustments in the programme and when we are supposed to restore debt sustainability, and looking at the way we have managed our affairs, especially in an election year, you will almost predict with certainty that there would be an extension of the programme.”
He was speaking at the Graphic-Stanbic Breakfast meeting on the theme: “The current economic situation and you.”
Prof Bokpin noted that the programme had proposed a cut down on capital expenditure to restore the economy even though Ghana had a huge infrastructure deficit.
He observed that failure to improve capital expenditure over time would lead to an inability to maintain or add to the stock of infrastructure, which in the medium to long term, would impose restrictions on the growth drivers of the economy.
“If you look at how many hours it takes the average Ghanaian to get to work and the productive hours we spend in traffic, and its effect on productivity, you will have to be unique to think that this country will make if we don’t do something fundamental about this,” he said.
Ghana would, therefore, require bulk of fiscal adjustments coming from debt restructuring to maintain a primary surplus of not be less than 10 per cent to achieve a sustainable debt level within the next five years.
The country, he, however, noted, had restructured less than 50 per cent of its domestic debt.
It had a universe of eligible domestic debt of 259 billion cedis to be restructured as at the end of 2022, he explained.
So far, he said, it had only restructured 85 per cent of GHS98 billion, with more than GHS123 billion debt to be restructured.
This debt, he mentioned, included cocoa bills, Bank of Ghana overdraft extension to government, and pension fund.
As far as external debt was concerned, he said Ghana had a financing gap in terms of balance of payment of about $15 billion, while the IMF was providing US$3 billion.
That, he noted, left the country with no option than to rely on external debt restructuring.
“Ghana is looking forward to more than US$10 billion in debt relief, fresh funding from external bilateral and external commercial partners. Is that not too much to ask from somebody else?” he asked.
He called for prudent measures to manage the revenue, generated rather than introducing more taxes, which was often lost to corruption and wastage.
Mr Benjamin Boakye, Executive Director for Energy Think Tank, Africa Centre for Energy Policy, urged the government to “meet citizens halfway’’ by implementing strategic reforms in the public sector – by downsizing government, improving monitoring of procurement, and reducing waste in the energy sector.
He said the biggest crime of the country was the procurement system.
“The procurement system has been consistently reviewed but we know that corruption is so massive in our procurement process,’’ he stated.
To buttress his point, he said that a recent track of contracts awarded by the government to his outfit revealed that many governments contract above one-million dollars did not go through a competitive tendering process.
To improve accountability and advocacy to address this challenge, he charged the citizens to be critical of certain ‘’ bad decisions’’ of the government because the negative implication of those decisions were not selective.
“It is not enough to say I am minding my business because when the decisions start biting like the we experienced, you would suffer regardless of who you are, but ensuring that the government works for the people is the job of all of us,’’ he stressed.
Mr Timothy Mugodi, Head of Corporate and Investment Banking of Stanbic Ghana, advised the accumulation and building of reserve at the micro and macro- economic levels to build resilience against economic downturns.
‘’We all need to create some reserve from whatever we earn so that we can allocate a percentage of that into savings so that when we go through a troubled patch, you are able to cope,’’ he said.