The IMF Must Not Reward Bad Governance

First Published on July 12, 2023

The Finance Minister this week expressed optimism that the next tranche of bailout from the IMF will be duly delivered to the Bank of Ghana after the scheduled review of the Programme in September.

This is after the IMF essentially caved in to the desperate scenarios created by the government to release the first tranche despite almost none of the preconditions being fulfilled.

To make matters worse, the Ghanaian government has decidedly adopted even worse governance measures after receiving the bailout and is definitely not worthy of receiving any subsequent bailouts until there is a reversal of course.

There are too many bad examples of governance to choose from but here are a few to make the folks af the IMF sit up and do their jobs!

First, there is an upcoming mid year budget review in a few weeks. This very important budget presentation is shrouded in darkness and secrecy. There has been no public discussion on the measures that should be in this budget and important stakeholders are as usual being sidelined. In fact, the mid year budget reading is being treated as so pedestrian that it is at the tail end of the current session of Parliament; basically ensuring that no serious debate will ensue before its passage. This is really poor governance; outrageous even.

Secondly, there is continuing mismanagement of the financial and investment sectors of the economy. The uncertainty of the Domestic Debt Restructuring Program has become institutionalized with government hinting every now and again that it will keep draining money from the sector. Coupon and principal payments to exempted bondholders has been so badly managed; it appears to be an intentional ploy to somehow distort the secondary bond market in favour of the DDEP bonds held by the banks. It a generational mess that if we don’t clean up immediately will undermine these sectors severally by next year.

Thirdly, government now owes every Tom, Dick and Harry in the country. These arrears upon arrears is choking the economy and rendering businesses that serve government defunct. There is now a cat and mouse game ongoing to ensure that those that shout the loudest are temporarily pacified without any long term structure being in place.

All this while; treasury bill rates have trended up strongly again, the largese of the state is still being spent on thousands of ministers, agencies and government apparatchiks, and ill thought, sporadic government projects are springing up solely for electoral purposes. Furthermore despite clear warnings by the IMF, government through the Bank of Ghana is continuing to interfere in the foreign exchange market through dubious auction purchases, gold for oil schemes and other such shenanigans.

We are currently a country in need of redemption bordering on spiritual cleansing. The IMF should not add to our woes by pouring more debt into our holes-filled barrel. They should leave us alone for now until we pump sense into each other’s heads and reverse from the catastrophic economic journey we have embarked on.