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10 August 2014

Kweku Baako calls for ceasefire on discussions over IMF Ghana bailout.

The Editor-In-Chief of the New Crusading Guide newspaper, Abdul Malik Kweku Baako is urging economic analysts and critics to hold their peace on commenting further on Ghana’s move to seeking an IMF rescue package.
According to him, all these discussions are premature, thinking, “we should wait for the package that will come out of the negotiations [sometime in September, this year].”
Discussing the country’s posture for an International Monetary Fund (IMF) loan to salvage the country from the doldrums on Joy FM’s Newsfile Saturday, Mr. Baako maintained the real discussion would begin after the deal has been reached in a couple of months to come.

Then, the commitments needed from organized labour and other sectors of the economy would come to play while expecting total discipline from the country’s economic managers, he added.

Furthermore, the newspaper manager argued that the IMF move, justified the lack of fiscal and monetary discipline within the country’s governance system.

“The implication of what the president said to us is that we are going to the IMF to get policy credibility because we had not been able, ourselves, to generate that policy credibility by our own conduct and management of the economic situation.

Indicating, “It’s as simple as that. It’s an honest admission of failure of the internal mechanisms that we had put in place and I like that honesty because it helps. That honesty is a very important political intangible that we all need to be able to build consensus and to draw support from all other stakeholders that, look here – we are indeed in crisis; we have an emergency on our hands; all hands on board.”

To Mr. Baako, the reality of the situation is terribly huge and “that’s why we have gone for an IMF bailout at this critical moment.”

Also commenting on the issue, a National Democratic Congress (NDC) Communicator, Sam George cited five ways why the government opted for the IMF rescue package.

He outlined price fluctuations of cocoa and gold, grand famine from development partners, long standing energy crisis, high salaries and wages as well as over reliance on imports.

Sam George explained that the dwindling prices of these commodities could not be attributed to mismanagement by the Mahama-led administration, stressing, the government of Ghana does not determine the prices of gold and cocoa on the world market.

Giving specifics, he said from 2002, the price of cocoa and gold started rising steadily until about 2010 when it began to slow.

He continued that the prices subsequently dropped in the last part of 2012. “So clearly, if you look at the international market pricing of gold and cocoa; from 2002 to 2012; we had a 10-year continuous rise in the prices of these two commodities.”

Secondly, he noted “the fact that we’ve had what we call a grand famine from our development partners. Our development partners have actually not been meeting their obligations or their pledges to us in terms of their grants.”

On the long standing energy crisis, which has negatively impacted production across the nation, he noted it would improve with the coming of the MCA compact two and a $5 billion contribution from the World Bank to tackle the energy sector in Africa.

High salaries and wages paid to workers, he narrated, inched by GHs9 billion from GHs3 billion and an estimated GHs10.2 billion for this year also necessitated the move to IMF. The amount, he said, represented a 56 per cent.

He said the importation of rice, poultry, cooking oil and sugar in 2013, amounted to $1.5 billion.

“These are the five cardinal issues the Economic Advisory Team basically, has identified as the reasons why we are where we are and we need to look at options that exist. And two of those options are the IMF and our development partners,” Sam George said.

He said the country went ‘begging’ because of Ghana’s lower middle income status.

As part of its home-grown policies, Ghana intends to structurally transform the economy by re-opening the Komenda Sugar factory while establishing another one in northern Ghana.

Manufacturing sugar locally, he mentioned would cut down on the amount of import. He added that in 2012, $650 million worth of rice was imported into the country and in 2013, the price lowered to $300 million, attributing the feat to government’s investment initiatives.

The IMF offers support to countries in three ways – technical support, loans to rebuild international reserves and help the stabilization of a country’s currency and surveillance, in line with article 4 of its mandate.


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