Six years ago today, ahead of Ghana’s decision to seek an IMF bail out, three civil society leaders elected to have discussions with the IMF in Washington.
Further to our quest to promote transparency then and now, I share with you some highlights of our meeting notes (Franklin of IMANI, Mohammed Amin of ACEP, now Deputy Energy Minister and Kan Dapaah of FAT Africa, now National Security Minister with the IMF in Washington. Later, the three of us will author an article detailing our specific requests of the IMF and Government of Ghana.
“1. IMF analysis insists that what’s driving Ghana’s current financial crisis is a ballooned fiscal spending; particularly on two accounts: wage bill (salaries) and servicing debt (with China and all those Eurobonds). Both are eating almost the entire budget. Actually leaving very little money for capital expenditure – expanding schools, roads irrigation systems. Aid (e.g. new MCC compact, FTF, and others) and oil revenues though small compared to the overall budget, are relevant for capital expenditures and developmental projects.
2. The macro economic instability (depreciation of the Cedi, inflationary pressure) is being fueled by the fiscal situation.
3. The pain of reducing the fiscal expenditure is unavoidable. The question is if it will be possible for the GOG and it citizens to reach a broad base agreement that will not place all the pain, again, on the poor.
4. Kan-D’s point is telling. If the only thing we seek to cut is the Wage Bill we are talking about 600K public sector workers, most of them either on Health (240k) and Education (another 240k). Will we just cut social spending? (We will share our IMF mtg Prep Notes, where multiple options are discussed). A broad based agreement between GOG and citizens on such critical issues is needed.
5. IMF didn’t give us much detail on the size of IMF’s package. But they did say to us that negotiations between GOG-IMF will last much less than 6 months. And the IMF will potentially focus on the balance of payments; while asking the WB to provide budget support, and ask USAID to continue supporting financial governance.
6. Since Ghana is a middle income country, the GOG is actually seeking the IMF package to gain credibility among international investors as to avoid getting high interest rates in the bond market –where they are looking to raise the largest share of the money they’ll need.”
The pioneering meetings and work with the IMF by IMANI, ACEP and FAT-Africa birthed the Civil Society Platform on engaging the IMF and government of Ghana for a less painful bail out.