<<Print>>

Ghanaian civil society organisations have blamed the emergence of factors that threaten to create socio-economic hardship in the country on the International Monetary Fund (IMF) and called on government to step away from IMF support and its "inimical" conditionalities. The call came from a number of civil society and industry players at an engagement with the Mr. John Lipsky, First Deputy Managing Director of the IMF, in Accra on Wednesday. The engagement, facilitated by the Institute of Democratic Governance (IDEG) in collaboration with JoyFM, an Accra-based radio station, was a heated one as participants did not pull back punches in telling the IMF boss how they felt about IMF conditionalities. This comes in the wake of recent renewed relationship between the government and the IMF, based on which the IMF had extended some US$600 million loan in 2009 and Special Drawing Rights 450 million to cushion Ghana's foreign reserves. But the members of civil society and the business community did not seem to be impressed by those gestures from the IMF. Since the government restored relationship with the IMF it has put forward a number of policy proposals such as increased taxes, halting government employment and other conditions that have not been received well by the public and the business community. Professor George Gyan-Baffuor, former Minister of Finance and Economic Planning under the NPP administration that led Ghana out of the IMF conditionalities, was the first to criticise the new administration for restoring Ghana's relationship with the IMF. He said the government's move to the IMF was out of panic rather than a strategic one since it was solely based on economic and fiscal challenges in 2008. Prof. Gyan-Baffuor said prior to 2008 the economy experienced consistent growth and inflation also fell consistently from 40 per cent in 2000 to less than 10 per cent in 2006, import reserve and Ghana's debts were also sustainable until 2008 when, due largely to the global financial crisis and other external shocks, every country was hit by some challenges. He said between 2004 and 2008 the country's debts fell from US$6.6 billion to US$3.4 billion, adding that the economy recorded surplus year on year until 2008 when it recorded a deficit of US$940 million and that was the basis for government returning to the IMF. "I disagree with the shift because the challenges of one year are not enough to run to the IMF and put your people under such socially-threatening conditions - must you run to your mother anytime you get a hiccup?" he asked. Prof. Gyan-Baffuor said 2008 was not a typical year that could be used to judge the performance of the economy. "The government's move constitutes management by panic and not management by strategy," he said. He noted that even though the IMF was usually blamed for setting inimical conditions for less developed countries, in this case, it was the government of Ghana that proposed the conditionalities and the IMF did not say no because it suited them. "Why didn't the IMF advice the government out of those inimical conditions if indeed the IMF claims that it is here to help reduce poverty and improve the living conditions of Ghanaians?" He said even though that IMF claims that its conditionalities were not structural, the kind of conditionalities that came with the US$600 million loan and SDR 450 million were purely structural. Mr Anthony Oteng-Gyasi, former President of the Association of Ghana Industries, said the growth experienced by Ghana and Africa five years prior to 2008 were not due to human or institutional interventions but natural ones such as increased prices of commodities on the global market. He said the coming of the IMF into Ghana is like a deja-vu, where the country experienced some growth and for just one instance of shock IMF comes in to take the country through a cycle of conditions that would not favour the business community and the masses. Mr Oteng-Gyasi noted for instance that there should be a cut-off point for the contribution of tax revenue to GDP and for a developing country like Ghana 22 to 23 per cent was a good cut-off point and there was therefore no point for the IMF to have sanctioned any more tax increases in Ghana. "It is time for IMF to change its mandate and start helping poor countries to develop their strategic sectors by engaging those sectors directly to find out how they could integrate them into the global economy through export-based development." He stated "IMF will only help poor countries to go down the valley but will not help them to climb the mountain and so we need to take our destinies into our own hands and not wait for the IMF because they will not help." Mr Gabby Otchere Darko, Executive Secretary of the Danquah Institute, questioned why a social democratic government like the NDC administration would lead the country into conditions that threatened to pose social challenges to the masses. Mr Vitus Azeem, Executive Secretary of Ghana Integrity Initiative, said it was hypocritical for the IMF to claim that they did not set conditions for poor countries, when in fact they subtly led those countries to adopt inimical conditions which were not applicable in developed countries. Mrs Comfort Villas, CEO of Camelot Ghana Limited, asked why the IMF would sanction increases in corporate taxes, making it difficult for the private sector to employ more people and yet sanction a halt in government employment too. "How can you create conditions that will lead to poverty and yet claim you are here to help poverty reduction?" she asked. Other participants called for wide consultations between the IMF and representatives of the people to ensure that the policies that were run by poor countries were owned by those countries. Mr Lipsky and Mr Peter Allum, IMF Ghana Mission Chief, took turns to assure Ghanaians that IMF would continue to support Ghana financially and technically to grow. They also urged the government to channel the upcoming oil revenue into long-term investments, saying that was a sure way to create jobs, improve living standards and make life better for the masses.