Burden sharing imminent – Ofori-Atta hints of austerity in race to stablise economy
BUSINESSES and individuals are expected to brace for tougher times as the move to find lasting solutions to the country’s high debt levels and the general worsening macroeconomic indicators will require some austere measures from all fronts.
Although negotiations between the government and the International Monetary Fund (IMF) are yet to be concluded for the citizens to know the policies and prigrammes agreed upon, the Minister of Finance, Ken ofori-Atta said the country will require some “burden sharing” to help it out of the woods.
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Mr Ofori-Atta said the need for individuals and institutions to contribute towards the economic recovery and resuscitation process was necessary for the government to properly deal with the fiscal challenges facing the economy.
“We are on the throes of debt sustainability analysis (DSA) and we are going to require burden sharing on all fronts as we apportion fiscal adjustments, debt operations and financing arrangements.
“We are working with the IMF Mission to address issues in relation to the triangle of macro framework, debt strategy and financing strategy - all three elements very much interrelated,” the minister said.
He was, however, optimistic that the negotiations would end soon with a deal, given the “mutual sense of urgency to fast track the negotiations”.
German toast
Mr Ofori Atta dropped the hint when he responded to a toast proposed by the German Ambassador to Ghana, Daniel Krull, on the celebration of the German National Day On October 5 in Accra.
“In all of these, there must be even handedness and comparable treatment.
“We look forward to further briefings and to the community here as we fast-track these discussions.
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‘‘Let us not waste this crisis but let us see how we can best use it to good effect,” he said, as he prepared the minds of Ghanaians and the investor community about what was to come at the end of the negotiations.
Debt analysis
In the statement issued by the IMF Mission, which concluded its mission to the country on October 5, reiterated that a debt sustainability analysis was underway.
It said the team would be in Washington, D.C. to advance its technical work.
"This includes making further progress on assessing Ghana’s debt sustainability.
"The discussions with the authorities will also continue in the weeks ahead, including during the upcoming Annual Meetings that will be convened at the IMF headquarters," the statement said.
Stabilising economy, protecting vulnerable
The first round of negotiations was aimed at sealing a fund-assisted programme to stabilise the economy, re-anchor growth and protect the vulnerable against the economic challenges.
The IMF team, which was led by the fund's Mission Chief to Ghana, Stéphane Roudet, said in a statement that: "We reaffirm our commitment to support Ghana in these challenging times, consistent with the IMF’s policies."
Area of focus
In the statement, the IMF described the discussions as constructive and focused on policies aimed at restoring macroeconomic stability and laying the foundation for stronger and more inclusive growth.
It said key areas of focus included ensuring public finance sustainability while protecting the vulnerable, bolstering the credibility of monetary and exchange rate policies to reduce inflation and rebuild external buffers and preserving financial sector stability.
It said the team also explored steps to encourage private investment and growth, including by improving governance, transparency, and public sector efficiency.
Programme request
Ghana requested a fund-assisted programme in July in a U-turn occasioned by heightened deterioration of macroprudential indicators, including soaring inflation, a falling cedi and growing public debt.
While inflation and the cedi depreciation ended September at 33.9 per cent and about 37 per cent, respectively, the World Bank estimates that the public debt will envelop total economic production by December 2022.
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The bank said in its Africa Pulse released this week that debt to GDP would peak at 104 per cent.
Meetings
The statement said the IMF staff met with President Nana Addo Dankwa Akufo Addo, Vice President Mahamudu Bawumia, the Finance Minister, Ken Ofori-Atta, and the Bank of Ghana Governor, Dr Ernest Addison, and their teams.
It said the IMF team also met with the Parliament’s Finance Committee, as well as representatives from various government agencies, the Trades Union Congress (TUC), the private sector, civil society organisations (CSOs), and development partners.
It also expressed the gratitude of the staff to the authorities, private sector, civil society, development partners and other stakeholders for their constructive engagement and support during these discussions.
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