Adnan Adams Mohammed
Data from the International Monetary Fund (IMF) indicates that, Ghana’s debt with the Fund hovers around US$1.644 billion as at December 7, 2023.
This positions Ghana as the seventh most-indebted African nation to the Fund.
On the continent; Egypt ranks first with US$11.968 billion debt, Angola follows with US$3.153 billion and South Africa places third with US$2.669 billion. In the West Africa sub-region, Cote D’Ivoire places first owing US$2.117 billion, Nigeria comes second with US$1,840 billion followed by Ghana on the third spot.
On the global space; Argentina owes US$31.100 billion making the southern American nation the highest indebted to IMF followed by Egypt which owes US$11.968 billion.
IMF is a key player in global finance, offering monetary assistance to governments suffering economic difficulties. However, these loans from the IMF can have deep and varied effects on each country’s economy. These effects are felt in some parts of Africa, particularly in regions where the debt is unsustainable.
In times of economic crisis, most countries run to the IMF for relief to stabilize their financial systems. These loans help cushion the economic adversities that countries may be going through.
Currently, Ghana is in a Balance of Payment relief program with the IMF which was approved in May this year. The first tranche of the $3 billion extended credit facility hit Ghana’s account on Friday, 19 May 2023.
The Finance Minister, Ken Ofori-Atta, at the press conference noted that, the executive board approval given to the bailout, has already started impacting Ghana’s economy positively.
“We are already seeing relative stability in the currency and inflation and revitalising our economy. Government with support from the IMF and collective effort with Ghanaians will work through our current challenges and emerge stronger.”
Loans from global financier can also help buff the country’s finances until they can come up with a more sustainable solution to their economic problems. And, additionally, a loan from the IMF can boost a country’s credibility in the eyes of foreign investors. This rise in trust may result in higher foreign direct investment and better access to global capital markets.
However, these loans if not managed or utilized properly could hurt an economy. Aside from the fact that debts owed in general can cause financial stress in any economy, as it represents an expense that the country must take responsibility for, IMF loans often come with stringent conditions, including austerity measures such as reducing public spending, cutting subsidies, and implementing tax increases.
While these measures are intended to address fiscal imbalances, they can lead to social unrest and adversely affect vulnerable populations. These complications can also seep into the country’s exchange rate, making local currencies weaker than they should be.