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Tag: Prof. Lord Mensah

  • It is terrible to shift IMF deal timelines – Prof Lord Mensah

    It is terrible to shift IMF deal timelines – Prof Lord Mensah

    An economist, Prof. Lord Mensah has said that shifting timelines to secure IMF deal is terrible.

    According to him, the market relies on management information, so when management information turns out to be uncertain, it does not help.

    “It’s a terrible one,” he said in an interview on Joy FM’S Top Story on Friday.

    He said that the Finance Minister and team do not appreciate the complexity of the situation [economic downturn or debt situation].

    According to him, the analysis of the situation in an article in Financial Times over the debt situation points out that Ghana won’t get a debt restructuring soon.

    He cited a case with Zambia.

    “Zambia is an African country. Zambia was in debt restructuring limbo for over two and half years before they even switched to default.”

    His comments come after President Akufo-Addo earlier disclosed that the IMF staff will present Ghana’s request for a loan programme to its executive board by the end of March.

    Also, the Finance Minister, Ken Ofori-Atta reiterated that government was hoping to secure an International Monetary Fund (IMF) Board approval by March 2023.

    “We are currently working to go to the IMF board in March 2023 and possibly secure the Board’s approval for Ghana’s Programme”, he disclosed on PM Express, Business Edition with host, George Wiafe.

    However, the March date elapsed and the country has not been able to get a deal.

    Meanwhile, addressing Eurobondholders at an Investors Presentation Forum on Thursday, Mr. Ofori-Atta said Ghana should expect an International Monetary Fund (IMF) Board approval for a programme by the close of May 2023.

    According to him, Ghana has made significant progress, hence the need for it to get approval as soon as possible.

    But reacting to this, Prof Mensah noted that although there may be verbal commitments from the creditors, it has not been documented for which it can be relied on to determine the timeline.

    He added that the country would not be able to secure an IMF bailout now until the first quarter ends.

  • IMF bailout alone won’t save us; cut down on expenditure – Economist to gov’t

    An Economist Prof. Lord Mensah says the $3 billion bailout from the International Monetary Fund (IMF) will fail if government still refuses to make some cuts in its expenditure.

    Government sought an IMF intervention to help restore the economy as the country battles its worst economic crisis in decades.

    On December 5, 2022, the government launched a domestic debt exchange programme which is part of a key requirement for the government to obtain an economic programme from the International Monetary Fund.

    Holders of approximately GH¢137.3 billion of principal amount outstanding of certain domestic notes and bonds issued by the Government were invited to exchange their Eligible Bonds for a package of new bonds to be issued by the Government.

    Speaking to Citi News on the issue, Prof. Lord Mensah said the IMF intervention will be fruitless less government agrees to make some cuts.

    “Government should look at what they are also going to sacrifice. We cannot stick to the same structures that got us into the economic mess we found ourselves in. If the government wants one party to sacrifice, the issue will be what are they [government] also sacrificing?”

    “We recommend that government at least changes the governance structure, ad remove some offices to ensure that we cut cost.”

    Source: Citinewsroom.com

  • Reliance on loans, bonds cause of exchange rate struggles – Economist

    The administration of Ghana’s currency rate regime over the years has alarmed economist Professor Lord Mensah.

    He asserts that succeeding governments have frequently turned to securing loans and bonds from financial markets and donors in order to control the currency rate.

    Prof. Lord Mensah asserted that Ghana’s exchange rate has not been properly handled in an interview with Accra-based Joy News.

    “We have never had our exchange rates manipulated. Loans have been used to manage it, and everything is evident on the grounds.
    For the sole sake of regulating our exchange rate, we have sacrificed our export-driven policies, our output, which will cut some importing, and both, he stated.

    “The reason why we can see the dollar moving without control is our absence on the Eurobond market. For the past few years, it is only this year that the government found it difficult to go on the Eurobond market,” he is quoted by Joy News to have said.

    He further noted that over-reliance of bonds and loans will continue to impact the economy, especially in the resolve toward becoming an industrialized nation with a sound export regime.

    “All other loans are coming in; the Cocoa syndicated loans are coming in, we could get loans from Afreximbank and all those but the problem we are having is access to the Eurobond market. And access to the Eurobond market in the sense that most of our debt which are foreign we have to service them using foreign currency,” the economist said.

    Touching on Ghana’s inability to access capital markets for borrowing, Dr Mensah warned that government may struggle to raise enough dollars to service interest payments, finance domestic projects and support importations.

    “And the Eurobond anytime we go there, if you look at the prospectus clearly it tells you that we borrow to defray existing debt and then we borrow extra to bring some in-house to grow the economy,” he said.

    “So effectively it has been the case that every year we have access to the Eurobond market to service our interest payments and so therefore the Cocoa syndicated loans and all other loans comes in to give us some buffer to meet the local demand of the dollar,” he added.

    Prof. Mensah explained, “So now that the Eurobond market has been frozen on us it has turned out to be difficult to meet this demand of interest payment and at the same time the local traders and all those transactions that goes on in the environment.”

  • Today in History: Ghana likely to go back to IMF – Economist

    Prof. Lord Mensah, an economist, said that if Ghana’s revenue continued to decline, it would certainly approach the IMF.

    He said, “As a nation, we’ve made significant investments to improve revenue collection.
    I therefore wonder why all of these investments are not translating into increased revenue.

    “Is it because the investment has been done and there is a large effect that we expect to see in the future? So for me, I think that there are so many things that are not adding up in the economic indicators that we have in the country. That is why when IMF came, they had to caution us as to how our debt is brewing in relation to the revenue that we are generating,” he said.

    Ghana is likely to return to the IMF, economist Dr. Lord Mensah has said.

    According to the University of Ghana Business School Lecturer, if the country continues to dwindle in its revenue and its debt continues to go up, it may be forced to subscribe to the IMF programme in the coming years.

    Speaking to Starr News’ Naa Dede Tetteh, Mr. Mensah said Ghana had made a lot of investment in the bid to enhance revenue generation, but the effect is not visible.

    He noted, “if we continue to realize this dwindling revenue over the years, and it continues for about five years, I think we are not far from going to IMF again.”

    He explained: “as a country, we’ve done a lot of investment in a direction to enhance revenue generation. So I ask myself why is it that all these investments are not building up into revenue generation. Is it because the investment has been done and there is a large effect that we expect to see in the future? So for me, I think that there are so many things that are not adding up in the economic indicators that we have in the country. That is why when IMF came they had to caution us as to how our debt is brewing in relation to the revenue that we are generating.”

    When asked what effect the payment of government salaries had on the economy, he said, “payment of salaries comes into the economic cycle, salaries build up into output. If salaries are building up into economic output, you shouldn’t struggle. If salaries are going into output that you can easily export, you end up having revenue that will even tame your foreign exchange fluctuation. So in the end, for me, I think it is not about spending on salaries; it has to do with priorities in our spending and some of the leakages that are in the spending processes.”

  • Our exchange rates have never been managed – Prof. Lord Mensah

    Associate Professor at the University of Ghana Business School, Professor Lord Mensah, says Ghana’s exchange rates have never been properly managed.

    According to him, the government has been managing it with loans and bonds from international donors thus following Ghana’s inability to return to the Eurobond market to raise money as a result of several downgrades by international rating agencies, it has caused a major shortfall in dollar reserves and the economic crisis ongoing.

    He noted that the reliance on loans and bonds came at the expense of the country’s drive to become a net exporter and the creation of a heavily industrialized economy.

    Speaking on JoyNews’ PM Express, he said, “Our exchange rates have never been managed. We’ve been managing it with loans and clearly everything shows on the grounds. We have sacrificed our export drive policies; we have sacrificed our production which will reduce some importation for just loans in managing our exchange rate.

    “The reason why we can see the dollar moving without control is our absence on the Eurobond market. For the past few years, it is only this year that the government found it difficult to go on the Eurobond market.

    He continued, “All other loans are coming in; the Cocoa syndicated loans are coming in, we could get loans from Afreximbank and all those but the problem we are having is access to the Eurobond market. And access to the Eurobond market in the sense that most of our debt which are foreign we have to service them using foreign currency.”

    He explained that now with the path to the Eurobond blocked for Ghana, the government is struggling to raise dollars to service interest payments, support importations as well as finance other local projects.

    “And the Eurobond anytime we go there, if you look at the prospectus clearly it tells you that we borrow to defray existing debt and then we borrow extra to bring some in-house to grow the economy. So effectively it has been the case that every year we have access to the Eurobond market to service our interest payments and so therefore the Cocoa syndicated loans and all other loans comes in to give us some buffer to meet the local demand of the dollar.

    “So now that the Eurobond market has been frozen on us it has turned out to be difficult to meet this demand of interest payment and at the same time the local traders and all those transactions that goes on in the environment,” he said.

    Source: Myjoyonline