An Economist, Dr. Adu Owusu Sarkodie, has stated the government should make efficient use of the $1bn IMF loan following the Fund’s approval of One Billion dollars for the country’s COVID-19 fight.
The Economist said that inasmuch as Ghana’s debt stock rises due to the $1bn loan from the IMF, the country’s focus should remain on utilizing the fund for its intended purpose.
The country’s debt is currently pegged at 218 billion cedis which represents 63 percent of the GDP.
According to the finance minister, Ken Ofori Atta “It is a zero percent facility, 10 years and five and half moratorium and does not come with any conditionalities”.
Speaking in an interview, Dr. Adu Sarkodie mentioned that the country obviously needs the money to restructure the economy after the COVID-19 pandemic.
“I think the public debt is high. Under normal circumstances, I wouldn’t even want to advise Ghana to borrow, but we find ourselves in a very difficult time and every country needs help from the IMF and the World Bank and even from our sister countries. So, I feel the main issue here should be about efficiency and accountability. We have borrowed so much. When we went to HIPC, our public debt was about 5 billion as of 2006. Thirteen years down the line it has been increased to 218 billion and that is ending December 2019, and we don’t seem to show much on the amount that we have borrowed. So, there’s always a question of efficiency and accountability. Are we going to use this IMF support for the intended purpose or is it going into somebody’s pocket?” he noted.
The International Monetary Fund on Tuesday, 14th April 2020, approved a loan of US$1 billion to Ghana to help address the urgent fiscal and balance of payments needs that Ghana is facing.
What should be done to ensure efficient use of the Fund?
Dr. Adu Sarkodie admonished that the government should put stringent measures in place to ensure the careful use of the funds.
“I think as a country, we should be very serious, we should put in place stringent measures to make sure that we use this fund judiciously to achieve the intended purposes. Obviously, countries that have done well in times of crisis like this, are countries that have solved simultaneously the coronavirus and reviving the economy. We need to do the two at the same time. We need to fight the spread of the virus and revive the economy at the same time. There is also a pledge to support the SMEs which is a good idea, but will they end in the books?” he asked.
He further cautioned that the country will suffer the consequences if the fund is misused.
“I want to plead with the authorities. We are not in normal times as they said. If they don’t use this fund judiciously, it will come back to haunt us and we will go and pay the loan and not have enough to show for the loan we have contracted. So, it’s a question of efficiency, transparency and accountability. We need to make good use of this,” he said.