A finance lecturer at the University of Ghana Business School (UGBS) has warned that Ghana’s economy will be severely harmed and that the country may need to seek policy credibility from the International Monetary Fund (IMF).
According to him, the economy is on the verge of collapsing as the country’s debt stock reaches crisis proportions and the Services and Income Account runs a massive deficit.
The finance expert told Evans Mensah, the host of PM Express, on Tuesday that the only thing keeping Ghana from going to the IMF is the cedi’s depreciation.
“If you look at the template that Ghana sent to the IMF in 1965 under the supervision of Dr Kwame Nkrumah, it is a reflection of what has been done since then.”
There is only one thing preventing us from going to the IMF right now, and that is the cedi’s depreciation.”
“If the Bank of Ghana decides to fight that, we will burn through our international reserves, and once those reserves are depleted, you will have no choice but to go to the IMF in an ambulance,” he explained.
Prof. Bokpin stated that, while not sustainable, the Bank of Ghana may use its Monetary Policy to draw down its foreign reserves in order to stabilize the cedi.
“This is what we did in 2014, and by the middle of the year, our net international reserves could only cover about two months of imports.” You will know when it reaches that point.
Prof. Godfred Alufar Bokpin attributed the phenomenon to Ghana’s foreign dominance, which has resulted in a massive deficit in the Services and Income Balance Account.
Prof. Bokpin, on the other hand, urged the Finance Minister to make certain changes to the 2022 Budget as soon as possible in order to provide some level of assurance and prevent the economy from collapsing.
He also stated that the local currency will continue to depreciate as a result of the unpredictability of the 2022 Budget.
According to the Finance Expert, the government has failed to outline a clear fiscal sustainability path in the 2022 financial statement that provides investors with comfort and confidence.
Prof. Bokpin stated once more that the current debt situation could worsen by the end of the September if proper interventions are not implemented.
Prof. Godfred Alufar Bokpin attributed the phenomenon to Ghana’s foreign dominance, which has resulted in a massive deficit in the Services and Income Balance Account.
Prof. Bokpin, on the other hand, urged the Finance Minister to make certain changes to the 2022 Budget as soon as possible in order to provide some level of assurance and prevent the economy from collapsing.
He also stated that the local currency will continue to depreciate due to the unpredictability of the market.
Despite the fact that Ghana has had a year-on-year trade surplus since 2017, the cedi has continued to depreciate at an alarming rate.
