Ghana’s economic challenges not because of bad policies but the result of Covid, Ukraine war shocks – IMF boss
Director of the IMF, Kristalina Georgina, has attributed Ghana’s prevailing weak economic conditions to shocks from the Covid pandemic and the Russian-Ukraine war.
According to her, shocks from the two externalities have heavily impacted the economy and are to be blamed for the country’s woes and not “bad policies” said to be implemented by the government.
“Like everybody on this planet you have been hurt by exogenous shocks. First the pandemic, then Russia supporting Ukraine. And then the we need to realise is not because of bad policies in the country, but because of this combination of shocks.
“And therefore, we have to support because you’re a member. You’re a strong country, you have fantastic people, but also we have to support Ghana because your strength contributes to the strength of your neighbours. It contributes to a stronger world,” she told norvanreports at the ongoing Africa Climate Change Adaptation Summit.
Speaking further on the anticipated IMF deal with Ghana, she noted the IMF is determined to have a deal with Ghana by the end of this year.
“I am very determined for us to indeed reach an agreement by the end of this year,” she quipped.
Ghana is seeking to raise some $3bn Balance of Payment IMF support programme to help resolve some of its immediate economic challenges.
The government began discussions with the Bretton Wood institution in July 2022, reversing President Akufo-Addo’s administration pledge not to seek a financial programme from the IMF.
Ghana has been struggling to stabilise a rising debt which hit 78.3% of Gross Domestic Product at the end of June 2022, from 62.5% five years ago.
The struggling economy has impacted negatively on the cedi which has hit GHS 10 to a dollar. This has also pushed inflation up significantly.
Ratings agency, S&P on Friday, August 5th, 2022, revised Ghana’s rating from B-/B to CCC+/C, putting the country’s creditworthiness into junk status.
It also reviewed the country’s economic outlook to negative, reflecting “Ghana’s limited commercial financing options, and constrained external and fiscal buffers.”
The American based credit rating agency, argued that the Covid-19 pandemic and the Russian invasion of Ukraine has complicated Ghana’s fiscal and external imbalances.
