A team from the International Monetary Fund (IMF) will hit the shores of Ghana this week to discuss how the country’s ailing economy can be salvaged.
The team will engage government in negotiations and then fashion out a programme to suit the country’s needs as well as discuss policy alternatives with the Bank of Ghana.
President John Mahama early last month directed that immediate initiatives be taken to open discussions with the International Monetary Fund (IMF) and other development partners in support of Ghana’s programme for stabilization and growth.
According to President Mahama the decision to open discussions with the International Monetary Fund was not because of the failure of government’s own home grown solutions, but rather because of the need for policy credibility and confidence from the international financial institutions, capital markets and investors for the measures being implemented to restore economic stability and growth.
“So we are going to discuss with the IMF how we can turn the deficit around quickly and create the kind of confidence even in the short-term narrative,”
The International Monetary Fund in August announced it had received a formal request from Ghana to initiate discussions on an economic programme that could be supported by the IMF.
The Deputy Managing Director of the IMF, Min Zhu in a statement said: “The Fund stands ready to help Ghana address the current economic challenges it is facing.”
“An IMF team will be sent to Ghana in early September to initiate discussions on a programme,” he added.
Ailing economy
The Ghanaian economy has been faced with some critical ailing conditions for some time now amidst rising inflation, a depreciating currency, high budget deficit amongst others.
Inflation currently stands at 15 .3 percent the highest rate since February 2010.
Year-on-year inflation accelerated from 14.0 percent in February mainly due to higher cost of housing, water and electricity (+43.8 percent), transport (27.3 percent), clothing and footwear (16.7 percent), health (13.4 percent), recreation and culture (13.8 percent), food and non-alcoholic beverages (8.2 percent).
The story is not different for the local currency the cedi.
Since the beginning of the year it has depreciated by 27 percent against the major foreign currencies the US dollar, British Pound and the Euro.
According to the Bank of Ghana’s financial stability report released in March this year the Cedi’s continuous depreciation against the major trading currencies as well as the continuous hikes in inflation is having a toll on profits of banks.
Government is still struggling to deal with the country’s rising budget deficit.
African Eye News
