As veteran finance minister Kwesi Botchwey prepared to lead Ghana’s delegation for negotiations with the IMF on an economic reform package in mid-September, President John Dramani Mahama was insisting the government was not looking for a short-term fix to the budget deficit.
I think one of our major failings is institutional
Rather, he said, the IMF talks were about wider economic restructuring and reforming institutions, not simply a bailout.
Mahama told reporters: “My eye is beyond 2016. The transformation agenda cannot be achieved in two years, and so any actions we’ll start with regards to negotiations with the IMF will go beyond the election cycle.”
Whatever Mahama thinks about the value of the IMF deal, senior officials in his party have their eyes overwhelmingly on the 2016 elections.
The first two years have been something of a roller-coaster for Mahama’s presidency.
“Following the supreme court ruling [which confirmed Mahama’s 2014 election victory], those who support this administration had a renewed confidence in their party and the president,” says Ransford Gyampo, a research fellow at the Institute of Economic Affairs.
“But, generally, I think that their confidence level is dwindling because of the precarious economic circumstances.”
Criticism has been growing, and not just from civic activists and opposition parties.
“What makes these [economic] challenges worse is that there is also the prevalence of corruption, and Ghanaians are not seeing much being done to deal with the canker,” says Gyampo.
Ken Ofori-Atta, executive chairman of financial services company Databank and member of the opposition New Patriotic Party (NPP), tells The Africa Report: “I think one of our major failings is institutional […] the strength of the auditor general, the accountant general, the ministries, the strength of the Bank of Ghana.”
Scepticism abounds about the IMF’s role in Ghana. The government of President Jerry John Rawlings axed tens of thousands of civil service jobs in the 1980s and 1990s when it secured a series of loans from the IMF and the World Bank.
Some argue the Mahama government wanted the IMF imprimatur before it went to the market to float a $1bn eurobond in September. nudebase.com
There are now concerns about how that $1bn will be used.
Ofori-Atta says he is worried about the signals a new IMF deal will send: “When you see a bunch of students that are unable to discipline themselves, you do need a teacher in there. It’s a very sour pill to swallow.”
Although Mahama has been talking up economic transformation and local content, Ofori-Atta says the policy mix has to be changed: “We need to come up with some tax reduction mechanism for industry so that we can boost it and create a special fund for industry. With the lack of reinvestments and lack of enthusiasm, people are moving away from manufacturing.”●
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