IMF Credit Facility in Ghana Could Worsen Vulnerable Situations, Warns Economics Professor

Professor Godfred Bokpin of the University of Ghana Business School (UGBS) has expressed concerns regarding the recently approved $3 billion International Monetary Fund (IMF) credit facility. According to Prof. Bokpin, while the program aims to restore macroeconomic stability, it is the vulnerable who will be disproportionately affected by the ensuing adjustments. He cautioned against premature celebration and highlighted the adverse distributional effects that are likely to impact the poor more severely than those responsible for the country’s economic challenges.

The lecturer emphasized that the fiscal consolidation measures prescribed by the IMF typically involve increasing revenue and restraining expenditure. However, Prof. Bokpin criticized the emphasis on revenue enhancement, pointing out that the problem lies not solely in low revenue but also in corruption, inefficiency, and excessive government borrowing and spending. He suggested that if the government had effectively managed the existing resources and addressed corruption, the need for an IMF program and the accompanying sacrifices from businesses and households may have been avoided.

One of the key concerns raised by Prof. Bokpin is the significant burden that the IMF program will place on businesses and households. He highlighted the government’s goal of increasing the tax-to-GDP ratio to 18.2 percent within the next few years, which he deemed a substantial sacrifice. The professor emphasized that the country’s current crisis cannot be solely attributed to low revenue and stressed the importance of efficient resource utilization and tackling corruption to prevent such situations from arising in the first place.

While the IMF program aims to restore macroeconomic stability in Ghana, Professor Godfred Bokpin has cautioned against overlooking the potential negative consequences. He emphasizes the need for a more equitable distribution of the adjustment costs and highlights the underlying issues of corruption and inefficiency that have contributed to the country’s economic challenges. With a call for greater fiscal responsibility and more effective resource management, Prof. Bokpin hopes that Ghana can address its economic woes without further burdening the vulnerable segments of society.

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