Kwaku Antwi-Boasiako: US$3bn IMF program headed for no place
From what has been accounted for, the absolute bailout cash Ghana hopes to get from the IMF is US$3 billion. At the ongoing conversion scale, that is simply over GH₵24 billion.
How about we put this in setting, so Ghanaians comprehend that the IMF program isn't the silver shot to give long haul answers for Ghana's financial issues on the off chance that we don't find serious quick ways to change the monetary groundwork of the country.
From the 2022 financial plan, interest installments in 2022 alone is GH₵37.4 billion. The three-and-a-half-year Ghana CARES (Obaatampa) program, which should lighten the impact of COVID-19 on organizations and return the economy on a supported way of development, has a sticker price of GH₵100 billion.
The IMF program might compel the public authority to be focused regarding consumption and obligation manageability. In any case, on the off chance that the public authority doesn't take time to consider supporting the genuine useful area of the economy and continues to take cover behind macroeconomic solidness and macroeconomic pointers, the frail groundwork of the economy will be uncovered over and over, even after the IMF program.
That is to say, assuming the economy remains import-subordinate after the IMF program, nothing will change for the country.
Do you be aware, for instance, that for a seriously lengthy timespan more than 65% of Ghana's poultry imports came from the United States of America? Also "regardless of diminishing imports somewhere in the range of 2014 and 2016, supplies from the United States catch north of 40% of piece of the pie" (https://www.rvo.nl/destinations/default/documents/2019/12/Update-poultry-report-ghana-2019.pdf).
While the USA's portion of the market keeps on diminishing, the IMF cares very little about prescribing a program to help self-supporting nearby poultry creation that will cut our poultry imports from the USA, Netherlands, Poland and Brazil. In reality, the IMF would prefer to give us a credit so we can have the Dollars to pay for our poultry imports.
On the off chance that as a country we don't assume control over our fate and assume responsibility for our useful area and industrialization, and we get focused on carrying out monetary models that deny the confidential area admittance to less expensive assets for speculation, then, at that point, we are everlastingly ill-fated.
Simply consider it: If the BoG raises T-Bill rate to 27%, which business bank will face the challenge of loaning to the confidential area to create chicken, when the money cost alone won't make the eventual outcome cutthroat against chicken imported from the USA, Netherlands, Poland and Brazil, where ranchers in certain cases get finance at under 2%?
Furthermore, if T-Bill rate is 27%, at what rate could a business bank offer credit to the confidential area? Regardless of whether the banks would loan to the confidential area under these circumstances, they would request huge guarantee security regardless of whether they charge 32% premium, to carry the gamble nearer to the gamble free T-Bill.
Do you recall those occasions when Ghanaian banks used to proclaim colossal yearly benefits, more from T-Bills than loaning to the confidential area?
The Bank of Ghana's reorder model to battle expansion, by raising the approach rate which thusly has raised the expense of getting to the confidential area, will keep the economy perpetually import-subordinate! The US$3 billion IMF program won't change the economy's import reliance.
The BoG, then again, can utilize quantitative facilitating to back the GH₵100 billion Ghana CARES (Obaatampa) program 100 percent and it won't prompt expansion!
Indeed, the IMF would demand that BoG shouldn't give money related funding to government, that's what advance notice "further financial supporting could sabotage the monetary independence of the national bank". Their typical monetary model would agree that that doing so would prompt expansion.
However, even the IMF conceded in Paragraph 43 of the 2021 Article IV Consultation report that the GH₵10 billion that the BoG gave to government didn't prompt expansion. As per the IMF, "Outstanding BOG loaning to government in 2020 littly affected expansion, however further money related funding could sabotage the monetary independence of the national bank."
The inquiry is, if the GH₵10 billion given to help government consumption had "little effect on expansion", how would you stress that giving GH₵100 billion to straightforwardly uphold the useful area to carry out the Ghana CARES program, a program that could make the economy less subject to imports, could prompt expansion?
In that general area in their own Article IV Consultation archive is adequately proof to back any of us requiring the BoG to utilize quantitative facilitating to help Ghana's industrialization by giving modest assets, through the Development Bank, for nearby Cedi-named inputs in the useful area.
Incidentally, did the IMF go against quantitative facilitating that the US and different nations used to recuperate their economies following the 2007/2008 worldwide monetary emergency?
Kwaku Antwi-Boasiako, Accra.
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