Economic Recovery: Economist warns Gov’t against being overly optimistic amid IMF programme
Ghana’s ambitious economic recovery plans, bolstered by a $3 billion International Monetary Fund (IMF) program, are facing cautionary skepticism from experts. While the government remains optimistic about the nation’s path to economic stability, concerns over the slow and arduous nature of the recovery process loom large.
At the forefront of this discussion is Professor Godfred Bokpin, a respected academic from the University of Ghana Business School. Prof. Bokpin has cautioned against an overly optimistic outlook, urging a measured approach as the country navigates the challenges ahead.
The remarks from Prof. Bokpin came in response to the update provided by Finance Minister Ken Ofori-Atta on the IMF program. Finance Minister Ofori-Atta hailed the approval of the program as a significant milestone, providing a much-needed impetus for the implementation of a comprehensive and well-thought-out reform agenda aimed at revitalizing the Ghanaian economy.
During a recent press encounter, Ofori-Atta said, “The real work of adjustments, realignments, and the return to a path of steady economic growth has just begun.” The approval of the program was secured on May 17, with an initial tranche of $600 million already received.
While the Finance Minister expressed confidence in the reform program, Prof. Bokpin struck a more cautious note, emphasizing the anticipated slow and painful nature of Ghana’s economic recovery. In an interview on TV3, he remarked, “If you look at the way the program has been structured, Ghana actually started implementing some of the projects in the program, our prior actions, even before the board approval. So if you see utility adjustments, they are prior actions we had to follow before the board approval, but I think broadly we seem to be overly optimistic, I think from the Finance Minister’s perspective.”
Prof. Bokpin’s cautionary stance stems from the recognition that Ghana’s economic recovery will require time and concerted effort. While the IMF program provides a framework for reform, the challenges facing the country are multifaceted and demand a comprehensive approach. The professor emphasized the need for citizens and policymakers alike to temper their expectations and acknowledge the complexities involved.
The issue of high inflation looms large in this context. Prof. Bokpin drew attention to Ghana’s inflation rate, particularly food inflation, which remains significantly above global averages. He cautioned against celebrating an inflation rate of 42.2 percent, stressing that it is still considered very high in the global context. This observation underscores the need for a realistic appraisal of the economic challenges and the necessity of sustained efforts to address underlying issues.
While caution is urged, it is important to recognize the government’s commitment to the reform agenda. Minister Ofori-Atta highlighted the significance of the post-COVID-19 Program for Economic Growth (PC-PEG), supported by the three-year Extended Credit Facility arrangement with the IMF. The program sets clear targets and outlines robust policy and structural measures aimed at rebuilding the foundations of the Republic.
However, the road to economic stability demands perseverance and a collective effort from all stakeholders. Prof. Bokpin called for a balanced approach, emphasizing that the recovery process requires a comprehensive strategy that addresses fundamental economic challenges, including expenditure control, revenue growth, and energy sector reforms. He underscored the need for both citizens and the government to meet each other halfway, acknowledging that the path to recovery will involve difficult decisions and adjustments.
As Ghana embarks on its economic recovery journey, it is crucial to strike a balance between optimism and realism. While the IMF program provides a framework for reform, the challenges ahead cannot be understated. A slow and painful recovery awaits, demanding sustained efforts, sound policies, and a shared commitment to rebuilding the nation’s economic resilience. As the government and citizens work together, the lessons learned from this critical juncture will shape the future of Ghana’s economy for years to come.
