Ghana Seeks IMF Bailout As Inflation Rises – Quartz Africa
Ghana’s annual inflation hit 29.8% in June 2022, the first time the country’s inflation rate hit 29% since January 2004. and utilities like electricity, gas and water .
The new inflation rate underscores the deteriorating economic conditions in the West African country, particularly this year. Between October and December last year, Ghana’s inflation rate averaged below 12%. In the second quarter of 2022, it was 27%, according to data from GSS.
Frustrated by the rising cost of living, Ghanaians staged days of protest in Accra in late June to get the government’s attention, following previous outcry over new taxes on electronic transactions. Seemingly unable to save itself, the federal government of Ghana is once again turning to help from the International Monetary Fund.
Ghana could benefit from an IMF aid program
An IMF team visited Ghana July 6-13 and met with the country’s Vice President, Finance Minister and Central Bank Governor. Carlo Sdralevich, head of the IMF delegation, said the covid-19 pandemic could have worsened Ghana’s fiscal situation and the Russian-Ukrainian war had further dampened growth. That said, “investor concerns have triggered credit rating downgrades, capital outflows, loss of access to external markets and rising domestic borrowing costs,” he said.
As with previous IMF interventions in Ghana, the two sides have begun discussing a “reform package to restore macroeconomic stability and anchor debt sustainability”. The deal could be based on getting President Nana Akufo Addo’s government in Ghana to take austerity measures without hurting the poor, while maintaining a stable exchange rate market. The government will also have to find ways to create jobs; last December, unemployment stood at 13.4%, three times higher than ten years ago.
Ghana’s last resort to the IMF is bittersweet as not too long ago the IMF touted it as the fastest growing economy in the world, implying that the country would not have no need for this type of intervention anytime soon. Indeed, Ghana has been touted as a beacon of economic progress and social stability in Africa in recent years, not least because it serves as the headquarters of the African Continental Free Trade Agreement (AfCFTA). Twitter’s choice of Accra for its first Africa office has amplified the narrative that the former Gold Coast could blossom into an African Silicon Valley.
All that hype is giving way to reality as the country’s outlook now looks bleak. Amid a global wave of inflation protests – Sri Lanka, Panama, Albania – Ghana is hoping IMF loans will come soon enough, though it’s unclear whether citizens will protest against it as they have. Kenyans last year, citing poor fiscal management by government officials.