finance

Groundhog Day as Ghana Seeks IMF Help a 17th Time

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Groundhog Day as Ghana Seeks IMF Help a 17th Time

Ghana may be one of Africa’s most politically stable countries. That hasn’t translated into sound economic management.

For the 17th time since the 1960s, the country is seeking a bailout from the International Monetary Fund, an indictment of its ability to learn from the mistakes that led to overspending and a crashing currency.

Day Three Of The World Economic Forum (WEF) 2020
Ghanaian Finance Minister Ken Ofori-Atta.
Photographer: Gem Atkinson/Bloomberg

This time the profligacy of its government has had severe consequences.

The cedi is the world’s worst performing currency tracked by Bloomberg, having lost almost 60% of its value against the dollar this year. Inflation is 40%, its benchmark interest rate is the highest since 2003 and credit ratings on its already junk-rated debt have been downgraded.

Finance Minister Ken Ofori-Atta is at risk of  losing his job and the country is asking creditors to forgo 30% of their investment. One remedy proposed to alleviate the pressure is to barter its gold for fuel imports.

Groundhog Day as Ghana Seeks IMF Help a 17th Time

“There’s no confidence in anyone or anything,” said Kobi Annan, an independent analyst who tracks Ghana’s economy. “It’s going to get worse before it gets slightly better,” he said, forecasting as many as three years of pain.

Ghana has been down this road before: Excessive spending on the government wage bill and the implementation of uncosted flagship projects. This time those include free secondary school education and the construction of a costly national cathedral in central Accra.

For investors, it means losses.

“I wouldn’t be surprised if next year there’s more,” Annan said.

See also  Government opens ‘Sankofa Account’ for Diaspora

 

 

Source: Bloomberg.com

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