IMF agreement will impact the future government’s financial flexibility – Haruna Iddrisu

The Member of Parliament for Tamale South, Haruna Iddrisu is worried about portions of the agreement entered into by the Government of Ghana and the International Monetary Fund (IMF).

He described the deal as extremely ambitious, considering some of the conditionalities proffered.

“It appears to me that the IMF ECF that the government of Nana Addo Dankwah Akufo-Addo and Bawumia have signed is an overambitious one. It is overambitious in the sense that it is going to affect the fiscal space that may be available to a successor government. It may be John Mahama government and NDC government tomorrow,” he said on Joy FM.

This comes in the wake of the IMF’s approval of Ghana’s programme request seeking a $3 billion Balance of Payment support to stabilise the economy.

He says the nature of the conditionalities will take a huge toll on the next administration that takes over from the incumbent.

The IMF has demanded that as part of prudent debt management measures, government tracks debt issuance by SOEs and public SPVs, in limiting and monitoring collateralized debt issuance, in strictly limiting borrowing on non-concessional terms, and in ensuring that debt payments are made on time.

Speaking on Joy FM’s Super Morning Show, the former Minority Leader said he sees this development as potentially disruptive to the plans of whoever takes over power in 2024, as the programme lasts for three years.

“Inherent in this agreement is that there shall be no non-concessional borrowing between now and 2027… there shall be no access to non-concessionary borrowing. So it means that… for concessional financing, government may not be able to borrow between now and 2027,” he said on Thursday.

According to the legislator, “That is what excessive and reckless borrowing does to an economy apart from the debilitating effect on the private sector on businesses on employment.”

Meanwhile, the Fund says Ghana breached the Debt Sustainability Analysis (DSA) thresholds, one of the situations that led the country into debt distress.

In a statement titled “Request for an arrangement under the Extended Credit Facility Programme”, the Fund said Ghana is in debt distress. It added that the country’s debt level is also unsustainable.

“Given the ongoing debt restructuring and large and protracted breaches to the Debt Sustainability Analysis (DSA) thresholds, Ghana is in debt distress, and debt is assessed as unsustainable”.

IMF further described Ghana’s fiscal policy as being characterised by overspending, structurally weak domestic revenue mobilisation.