An Economist and Professor of Finance, Godfred Bokpin, has disclosed that the International Monetary Fund’s Executive Board reluctance to approve Ghana’s $3 billion bailout is due to the country’s significant budget deficit.
The Economist in an interview mentioned that Ghana’s 2023 budget deficit alone amounts to $5 billion, exceeding the IMF bailout by $2 billion.
Professor Bokpin further explained that Ghana’s recent courting of the US’ favour in pursuing an IMF bailout may have played a role in securing a staff-level agreement, but that the size of the deficit is a critical issue that the IMF cannot overlook.
“And I think that in all of this it’s obvious now that the hole that has to be closed is so big, and it’s the reason why the IMF doesn’t want to approve the programme. If you pick the deficit in 2023 alone, in the budget as approved by the IMF in dollar terms, using Bank of Ghana’s official exchange rate, it is more than $5 billion to close.
“So the IMF knows very well that without assurance, of either debt relief or fresh funding from Ghana’s multilateral and bilateral partners, the programme can only achieve limited effect.”
Professor Godfred Bokpin
Prof. Bokpin Urges Government To Strategize Measures Of Closing Its Budget Deficit Gap
According to Prof. Bokpin, the challenge for Ghana, therefore, is to find ways to close the budget deficit and stabilize its finances. This, he said, will require a concerted effort on the part of the government to rein in spending, increase revenue, and seek out new sources of financing.
The Economist also noted that It will require the support of multilateral and bilateral partners, who will need to provide Ghana with the necessary resources to address its fiscal challenges.
Ghana’s fiscal challenges, as stated by Prof. Bokpin, remain significant, and the country will need to work hard to address them. The IMF’s reluctance to approve Ghana’s bailout, he said, underscores the challenges facing the West African country as it seeks to shore up its struggling economy.
Ghana has been hit hard by the Covid-19 pandemic and has seen its fiscal deficit widen significantly in recent years. The IMF has long been a key partner for Ghana, providing loans and technical assistance to help the country address its fiscal and economic challenges. In particular, Ghana’s large budget deficit remains a major concern, with the country struggling to find ways to close the gap and stabilize its finances.
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