Gov�t Divided Over IMF Bailout

Keys actors managing Ghana�s troubled economy are sharply divided over whether government should seek financial bailout from the International Monetary Fund (IMF) to fix the challenges in the Ghanaian economy. While some government economic experts are advocating the administration takes urgent steps to seek assistance from the IMF to arrest the deteriorating fundamentals in the economy, their counterparts, who ironically, are directly in charge of the handling of the economy won�t budge. Media reports over the past weeks suggest government of Ghana, the World Bank and the IMF have been engaged in discussions likely to lead the country entering into a new Medium Term Frame with the IMF to secure financing for its projected 2014 budget deficit of GHC 8, 970.8 million. Information reaching The aL-hAJJ reveals that managers of the Ghanaian economy have been positing counter arguments for and against a possible bailout from the IMF. The aL-hAJJ�s sources say the Governor of the Bank of Ghana, Dr. Henry Wampa is leading the pack of those in favor of a bailout which will see Ghana getting some form of balance of payment support to shore up the fast depreciating currency, the Cedi. Others include all former NDC Finance Ministers like Dr Kwesi Botwe, Kwame Peprah and Dr Kwabena Duffuor, and a member of government economic management team who also doubles as senior economic Adviser to the President, Dr Nii Moi Thompson. They argue that the surest and quickest way for Ghana to come out of the present economic difficulties is to embrace an IMF program. They argue forcefully that though financial assistance from the IMF would come with its harsh conditionalities such as, a cut in the nation�s spiraling wage bill; they believe it will give government some breather as new inflows would be injected into the economy to help stabilize it. But their counterparts against an immediate IMF bailout led by President John Mahama, his Vice, Mr Kwesi Bekoe Amissah Arthur and Finance Minister, Emmanuel Seth Terkper and his two deputies, Minister of state at the Presidency in charge of Allied Financial Institutions, Fifii Kwetey and the Chairman of the Finance Committee of Parliament, James Klutse Avedzi, are of the view government must put on hold the idea and wait to see what fruits government�s developed �home-grown� measures currently being implemented will yield. Even though the ��home-grown� measures has been blamed for the general hardship in the country, President Mahama and his colleagues against the IMF bailout argued, the �home-grown� measures put in place should work for some time to see the results it will yield. They say if government in the middle of implementing these measures jumps to the IMF and should the �home-grown� measures begin to yield the desired results, the IMF will take credit for solving Ghana�s economy challenges. Managers of Ghana�s economy have attributed the problems facing the economy to declining commodity prices and the �US tapering� which according to them has largely contributed to the sustained depreciation experienced by the Ghana cedi Meanwhile, Head of Financial Stability at the Bank of Ghana, Mr Benjamin Amoah has said there is a slowdown in the depreciation of the Cedi, after measures by BOG to halt it. The BOG introduced measures at the beginning of the year, to halt the depreciating of the Cedi, among which was the withdrawal of both Foreign Currency and Foreign Exchange Accounts in Cedis at the existing exchange rate over the counter, except for traveling purposes. Speaking at a recent seminar organized by the Institute of Economic Affairs in Accra, Mr Amoah explained that with the introduction of the new measures, the cumulative depreciation of the Cedi against the dollar which was 7.2 per cent from the beginning of January this year, has been reduced to 1.29 per cent as at April 9. He said in addition to the slowdown in the pace of the depreciation, the market has also witnessed a decline in the volatility of the Cedi to the US Dollar.