IEA Raises Red Flag
The Institute of Economic Affairs (IEA) has issued a stark warning that Ghana risks returning to the International Monetary Fund (IMF) for the 18th time if urgent reforms are not implemented to stabilize the struggling economy.
Ghana, currently under its 17th IMF programme, entered the latest bailout in 2022 after severe debt distress, high inflation, and dwindling foreign reserves crippled the economy. The programme included a $3 billion support package aimed at restoring fiscal stability and rebuilding investor confidence.
However, the IEA believes that without significant structural reforms, the cycle of IMF dependence will persist.
“We Are Stuck in a Vicious Cycle”
Speaking at a press briefing, an IEA senior economist noted:
“Ghana’s over-reliance on borrowing, weak revenue mobilization, and poor fiscal discipline continue to drag the economy backwards. Unless there is a radical shift in governance and economic management, Ghana will inevitably return for an 18th bailout.”
The think tank pointed to Ghana’s repeated failures to build resilience during times of relative economic stability, instead resorting to reckless spending and unsustainable debt accumulation.
The Debt Trap
Ghana’s current debt-to-GDP ratio remains above 70%, despite ongoing restructuring efforts with both external and domestic creditors. Inflation, though easing slightly in recent months, is still significantly higher than the government’s target, while the local currency, the cedi, continues to face depreciation pressures.
The IEA says these vulnerabilities make the economy extremely fragile and prone to shocks, leaving IMF programmes as a recurring “safety net.”
The Political Factor
The warning comes just months before the 2024 general elections, a period traditionally associated with fiscal slippages as governments ramp up spending to win voter support. Economists caution that if history repeats itself, Ghana could undo the progress made under the current IMF programme.
What Must Be Done?
The IEA has called for bold measures, including:
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Strengthening domestic revenue mobilization.
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Reducing the size of government and curbing wasteful spending.
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Implementing strict fiscal responsibility laws with real consequences for breaches.
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Diversifying exports beyond cocoa, gold, and oil.
Outlook
While the IMF programme offers short-term relief, experts say Ghana’s long-term stability depends on political will and consistent reforms. Without these, the IEA warns, the country’s economic story will remain the same: short-lived recoveries followed by yet another return to the Fund.
Source: My News Ghana
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