Each of the countries going to IMF have unique circumstances that have led them to declare the need for help. Ghana is locked up in staggering pension liabilities, expensive labor contracts, huge flagship programs with large expenditures, and at the same time tax revenue that have fallen due to a weak economy and sluggish market and changes in government policies.
For countries in the worst financial situation, the IMF process provides a legal framework to reorganize debts and negotiate an orderly plan to repay creditors. We know IMF can also force the political will necessary for politicians, government officials, and the people of Ghana to make difficult, painful decisions that address deep-rooted fiscal, political, and structural problems, and give us a fresh start.
Unfortunately, during the pre-covid era, officials spent a lot more freely, financed large-scale civic improvement projects and entered into long-term contracts with public sector workers, obligations that could not easily undo when revenue fell.
We borrowed extensively to finance numerous projects including the Pokuase interchange, fish landing sites, sea defense projects, bridges, hospital expansion and modernization, covid-19 emergency-related bills, ambulance expenses, university constructions, water and sanitation projects and recruitment of more public health and public safety workers, just to name a few.
As tax revenues fell during the pandemic, municipals and for that matter governments found it increasingly difficult to continue to fulfill promises to the nation and the international community. Moreover, public pension funds also experienced significant investment losses, further increasing unfunded pension liabilities. When IMF gets on board we can then renegotiate with all creditors, dealing with each person in a fairly and equitable way.
The government is committed to fulfilling its responsibility to protect the lives, health, morals, comfort, and the general welfare of the public. Many contracts will be impaired however, it will be done with the interest of the nation as our priority. Property tax, license fees and levies will all be looked at heavily, and may I add the re-introduction of a modernized version of road tolls.
Municipal council persons and assembly leadership all ought to start coming to terms with the fact that times certainly have changed. Long term, some fears in the system will affect businesses negatively. Government revenue streams will drop for a while, but we hope they will reverse in the foreseeable future.
We are struggling with enormous shortfalls, but we need a more sustainable approach and am certain IMF will help us do just that. It is better we don’t default on several debt payments in the remaining months to come. The facts behind our engagement with IMF and clearly very important and we ought to agree that the circumstances are very different and severe in nature. We have been compelled to go for relief to keep the nation at the right position in order not to abdicate responsibilities for providing the people all the needed services including electricity, water, shelter and public safety.
Although IMF can offer a way out of dire financial straits, it is a long and expensive process with lasting economic, political, fiscal, and public relations consequences. I have to say it is not a silver bullet or a panacea. Honestly, it is the last resort and the government may not have anywhere else to go. It is a disruptive process and can taint the public perception of the country, causing further economic hardship. The whole process creates some uncertainty, making our nation less attractive for businesses.
In fact many people I have spoken to don’t know what to expect. Many wonder whether electricity supply will be affected, or school attendance, or health care delivery. Either way, this is a real challenge in our life. I am confident that the government will appoint qualified men and women to manage the affair of the state so help me God. Thanks and may the Lord put more blessings in Ghana’s way. Long live Ghana, Long live the President and his cabinet. Let’s continue to hope for the best.
Dr. Adomako Kissi
Member of Parliament