IMF deals: African leaders have proven incapable of managing own affairs – Lumumba

Renowned Pan Africanist, African Law Professor and Founder of the P.L.O.Lumumba Foundation, Patrick Loch Otieno Lumumba, is worried over the decision by African leaders to constantly seek help from the Bretton Woods Institutions, the International Monetary Fund (IMF) and the World Bank.

He says that when officials of these institutions sit, they say to themselves that African leaders are not able to manage their affairs properly.

“When they sit at the IMF and World Bank or European Union when Africans are not there, what do they say, we told you they are incapable of managing their affairs,” Prof Lumumba told TV3’s Alfred Ocansey in a yet-to-be-aired interview on the Ghana Tonight show on Thursday Febraoury23.

Ghana is currently seeking to close a deal with the IMF to enable the oil-producing West African country to deal with the economic challenges.

The country and the Fund have reached a staff-level agreement on a new programme.

The Managing Director of the IMF Kristalina Georgieva said she was happy with the progress Ghana has made in bringing the staff-level agreement to the Board.

She said the IMF supports Ghana’s efforts to stabilize the economy and promote an inclusive recovery.

In a tweet, she said “Wonderful to meet President @NAkufoAddo at #MSC2023. Very pleased to hear authorities are making progress on bringing the staff-level agreement to the IMF Exec. Board. We support Ghana’s efforts to stabilize the economy & promote an inclusive recovery.”

The staff-level agreement with Ghana is for a three-year programme supported by an arrangement under the Extended Credit Facility (ECF) of about $3 billion.

The approval by IMF management and the Executive Board in the period ahead is contingent on receiving financing assurances from Ghana’s partners and creditors, the IMF Boss said while answering questions in Frequently asked questions on Ghana.

The goal of the government’s economic program is to restore macroeconomic stability and debt sustainability while protecting the vulnerable, preserve financial stability, and laying the foundation for strong and inclusive recovery.

To support the objective of restoring public debt sustainability, the authorities have launched a comprehensive debt operation.

As part of the efforts to get the deal, Finance Minister Ken Ofori-Atta briefed Parliament on the state of affairs regarding the Domestic Debt Exchange Programme (DDEP).

He urged the lawmakers to support the government in getting the board approval from the IMF to ensure economic stability.

Mr Ofori-Atta told the House on Thursday, February 16 that an IMF deal will help Ghana recover quickly from the economic challenges.”

“We will recover from this crisis soon rather than later as indicated by President Akufo-Addo.

“I will urge Members of Parliament to support the government to secure the board approval for macro stability.”

Ghana’s fiscal and debt vulnerabilities worsened fast amid an increasingly challenging external environment. During the COVID-19 pandemic, Ghana’s public debt increased significantly.

At the same time, the government’s efforts to preserve debt sustainability were not seen as sufficient by investors, leading to credit rating downgrades, the exit of non-resident investors from the domestic bond market, and ultimately Ghana’s loss of access to international capital markets.

These adverse developments, the IMF noted, further exacerbated by price and supply-chain shocks from the war in Ukraine, have led to a large exchange rate depreciation, a surge in inflation (40.4 percent year on year in October) and pressure on foreign exchange reserves. Against this backdrop, the government requested assistance from the IMF in early summer and a stafflevel agreement was reached in December 2022.

The programme will support Ghana in implementing policies that restore macroeconomic stability and ensure debt sustainability while protecting the most vulnerable parts of its population.

It would help create the conditions for inclusive and sustainable growth and job creation. Such a program would also help alleviate exchange rate pressures and provide a catalytic effect on additional sources of financing, the Fund said.