IMF negotiations: Approach with open mind – Tekper advises government

A former Minister of Finance, Seth Terkper, has advised the government to have an open mind in the ongoing discussions between it and the International Monetary Fund (IMF).

He said that would enable the two sides to fashion out the best possible solutions to the challenges facing the economy.

It would also allow the World Bank Group and other development partners (DPs) to leverage the existence of an IMF programme to support the government, as had always been the case, Mr Terkper, who was the Finance Minister when the country entered into the $918-million extended credit facility (ECF) in April 2015, said.

The former member of staff of the IMF added that any attempt to limit the discussions to one area of concern to the government would constrain the fund from proposing holistic solutions to the fiscal, monetary and structural challenges that forced the country into the IMF programme, the 18th since 1957.

Interview

The chartered accountant and public finance expert was speaking with the Daily Graphic yesterday on how the country could get the best from the fund in the upcoming programme meant to anchor the balance of payment (BOP) position and tackle the rising debt portfolio.

The bailout is also to reduce the fiscal deficit, bolster economic recovery and solidify institutional reforms to optimise growth.

Mr Terkper is most credited for leading the economic stabilisation after the 2012 elections, activating the country’s Sinking Fund, cleaning up government payroll of ghost names and introducing the Ghana Integrated Financial Management Information System (GIFMIS).

Bold step

While commending the government for the bold step to seek support under an IMF programme, Mr Terkper said the attempt to limit the remedy from the fund to BOP was unfair to the Bank of Ghana (BoG) and also unrealistic, especially given the challenges currently facing the economy.

He said the strong debt build-up since 2018 and the resulting large fiscal deficits were issues of concern that any IMF programme would seek to address.

He, therefore, wondered why the government would narrow down issues of interest in a possible IMF programme to only BOP, as was communicated to the public in the official announcement by the Information Minister, Kojo Oppong Nkrumah, and in subsequent comments by various government functionaries.

Statement

“The statement from the Information Minister said the government was seeking support to address BOP challenges.

“As a nation, we should look beyond BOP. Even if the BoG has difficulties with BOP, it means that the reserves are low, and they are low because there is a fi scal problem,” he said.

Mr Terkper mentioned the government’s discount policy on imports, spearheaded by Vice-President Mohamudu Bawumia, and the BoG’s financing of the budget in 2020 as some of the fi scal actions that cost the country pricy reserves, leading to the challenges in the BoP position.

“So the government needs to see the problem beyond BOP and go with an open mind because the support will go beyond BOP,” he said.