The IMF Deal is Beginning to Bite where It Should Hurt

First Published June 16, 2023

‘We are not going to the IMF today; We are not going to the IMF tomorrow…’.

When we heard our Politicians say this before finally succumbing to the IMF deal as our reserves evaporated; it was not necessarily because they didn’t think we needed the IMF dollars or because they feared political defeat by their opponents in an election they know will be won by who has the most money.

The reason they were adamant about this in the face of all contrary evidence is because of the type of things the IMF can do to their illicitly acquired wealth and fortune.

One of these important interventions have recently been revealed as a part of the deal with the IMF and that is the directive to open accounts with the Bank of Ghana for all Ministries, Departments and Agencies under the Government.

This may seem like an innocuous move to the uninitiated. However, it is a tsunami of epic proportion that we should doff our hearts to the IMF for negotiating.

At the heart of most of the corrupt activities by government functionaries and the Ghanaian financial architecture is this symbiotic relationship that ensures that public money flows into the pockets of private individuals and businesses while at the same time raking up these huge amounts of public debt that has precipitated the current collapse of the economy.

This is how the scheme is supposed to work;

MDAs of Government keep accounts with private banks and other financial institutions. There are reports of some financial institutions in Ghana whose survival is dependent on these funds. The managers of these institutions would therefore become beholden to the politicians who control these MDAs.

First, this results in overt acts of corruption where the returns or ‘promoters fees’ on such funds can be siphoned by corrupt Government officials. This is billions of Ghana cedis on a regular basis.

Then there is the quid pro quo. ‘Grateful’ managers of these financial institutions are then directed by their political ‘benefactors’ on where to invest those huge government funds. Some of these funds find their way to interests of political cronies for loans and investment purposes. A huge amount of these funds is simply given back to the government through the purchase of treasury bills and bonds; thereby robbing Peter to pay Paul.

But it doesn’t end there. The government then gives huge interest rates on these bills and bonds; effectively compensating the financial institutions for being pliable.

Forensic examination of the above series of events should reveal the true cause of the financial sector cleanup which resulted in a loss of close to 30 billion cedis in taxpayers money; which has gone back to the financial predators that caused the whole sham.

It is also the foundation of the Domestic Debt Restructuring Program that threatens to destroy trust in the financial sector for a generation. Furthermore, taxpayers are likely to bailout these same financial institutions when the dominoes start to fall.

This incestuous relationship is also at the heart of the perennial depreciation of the cedi against its trading currencies as foreign currency deposits from the banks are funneled to the black market who control the supply and the pricing dynamics of the exchange market.

So the IMF is on to something big! Closing this loophole as well as the Fund’s earlier instructions for zero BOG financing has the potential to finally cripple the implied corruption and economic crimes being perpetuated on Ghanaians under such schemes. Independent, continuous and significant audits of the Bank of Ghana will also be helpful to prevent any more shenanigans that will arise.

Ghanaians must follow these developments with rapt attention. This matters!