The Government of Ghana must be prepared to take “tough measures” geared toward cutting down expenditure as it engages the International Monetary Fund (IMF) for support.
The measures include reducing the size of the government and reviewing some flagship programs such as the Free SHS Program to reduce expenditure.
Speaking to selected journalists at a forum dubbed: “Time with IEA Fellows,” Dr. John Kwabena Kwakye, the Director of Research at the Institute of Economic Affairs (IEA), said the IMF Program would not achieve its objective of stabilizing the economy if the Government failed to cut expenditure and increase revenue.
He said the main goal of the Program was to provide policy credibility and help to restore confidence in the markets in the short term.
“We have a large economic and structural imbalance; IMF will close the budget gap. The Fund will not essentially solve the structural weaknesses in Ghana’s economy.
“…Our authorities ought to negotiate for policies that support long-term growth,” Dr. Kwakye said.
Ghana, in July, commenced engagements with the IMF for Balance of Payment support to quicken the country’s economic recovery process.
The first round of discussions between the Government and the IMF ended on Wednesday, July 13, 2022.
Experts project that the IMF could disburse as much as $3 billion to Ghana and unlock budget support from other multilateral lenders.
They, however, indicate that the timing of the support would be dependent on the country’s ability to present a credible fiscal reform plan.
Dr. Kwakye said Ghana must prepare its own program and present it to the IMF as part of the negotiations.
He said, although the country would not get all that it desired in the negotiations, the indigenous program would help to make a strong case for the country and quicken the process.
He said one of the key requirements to address the country’s economic challenges was to “enlarge our revenue envelop” and take drastic measures to reduce expenditure.
With respect to the Government’s flagship programs, Dr. Kwakye said the Government must focus on policies that were geared toward human capacity development and forego those that would put a strain on its expenditure.
“I don’t see why we can’t touch Free SHS…. Let parents who can afford to pay part of the cost. Policies that do not focus on human capacity development can be phased out,” Dr. Kwakye said.
He also urged the Government to create an enabling environment for the private sector to grow and create employment.
“There are a lot of rigidities in our expenditure. Public sector compensations are huge. The public sector needs to be downsized to be more productive so that we can remunerate them better,” Dr. Kwakye added.