Ghana spends $2.6bn on importation of tea, wigs, soaps, brooms, 10 others
Ghana’s import bill for 14 specific items surged to approximately $2.6 billion in 2021, with products ranging from fake hair (wigs), tea, soaps, detergents, rice, brooms, used clothing and others, according to data from the OEC trade data repository. Notably, the country spent over half a billion dollars on rice imports, more than $400 million on poultry meat, and close to $290 million on palm oil.
In response to the escalating import costs, Ghana’s Trade Ministry sought to enact legislation aimed at restricting the importation of 22 specified products. However, this move faced unexpected hurdles, as the government suspended its decision to present the legislation before parliament. The proposed restrictions targeted items such as rice, cement, fish, sugar, and animal by-products known as ‘yemuadie.’
The Trade Minister, K.T Hammond, championed the legislation with the hope of bolstering the local currency, the cedi, and fostering the growth of domestic industries. Under the proposed regulation, individuals intending to import the specified products would have been required to obtain permission from the Trade Minister.
Despite the government’s efforts, the Minority in Parliament called for an immediate withdrawal of the regulation, emphasizing concerns about the impact on key commodities and industries.
Adding complexity to the situation, the International Monetary Fund (IMF) has explicitly communicated to the Ghanaian government that it cannot impose or intensify import restrictions for balance of payments purposes. This stipulation is embedded in the IMF bailout package, pledging $3 billion in support to Ghana’s balance of payments between 2023 and 2026.
The IMF outlined four specific decisions that Ghana is prohibited from taking while under the IMF program, including the imposition or intensification of import restrictions for balance of payments reasons. These criteria underscore the delicate balance Ghana must navigate between addressing its import challenges and adhering to the conditions set forth by the IMF.
The decision to suspend the import restriction bill aligns with performance criteria of the Fund which include:
- No imposition or intensification of restrictions on making payments and transfers for current international transactions.
- No introduction or modification of multiple currency practices.
- No conclusion of bilateral payments agreements inconsistent with Article VIII of the IMF Articles of Arrangement.
- No imposition or intensification of import restrictions for balance of payments reasons.
The Fund emphasised that these four performance criteria will be monitored continuously.
