An Economist, Dr Adu Owusu Sarkodie, has cautioned government against the misuse of the $1bn loan procured from the International Monetary Fund (IMF).
On Monday, April 13, 2020, the Executive Board of the IMF approved a $1 billion Rapid Credit Facility (RCF) to Ghana.
A statement issued on the IMF’s website says the disbursement is to help Ghana address the urgent fiscal and balance of payments needs that it is facing, improve confidence, and catalyse support from other development partners.
The IMF facility comes with zero interest; with a repayment period of 20 years, and a five-year moratorium.
Make good use of the money
But, Dr Sarkodie, has warned that the country will pay dearly in the future if it misuses the money.
In an interview with an Accra based radio station, the Economist advised Government to make judicious use of the money.
“We are not in normal times as they said. If they don’t use this fund judiciously, it will come back to haunt us and we will go and pay the loan and not have enough to show for the loan we contracted.
“So, it’s a question of efficiency, transparency and accountability. We need to make good use of this,” he said.
He further called for stringent measures to be put in place to make sure the IMF loan is used for the intended purposes.
He said that “I think as a country, we should be very serious, we should put in the stringent measures to make sure that we use this fund judiciously to achieve the intended purposes”.
Reviving the economy
He, again, advised the government to also focus on reviving the economy while fighting the coronavirus disease out break in the country, adding that “countries that have done well in times of crisis like this, are countries that have solved simultaneously the coronavirus and reviving the economy”
“We need to do the two at the same time. We need to fight the spread of the virus and revive the economy at the same time”.
Rising debt stock
Ghana is still classified a high risk of debt distress country with a current debt hovering around 218 billion cedis, representing 63 percent of Gros Domestic Product (GDP).
Some people, including some members of the opposition party, have raised concerns over Ghana’s rising debt stock, saying it is not sustainable.
However, Dr Sarkodie, says that inasmuch as those concerns are legitimate following the IMF’s approval of $1 billion dollars for the country to tackle COVID-19 pandemic, the focus should rather be on the efficient use of the money.
He adds that the country certainly needs the money to rebuild the economy after COVID-19.
“I think the public debt is high. Under normal circumstances, I wouldn’t even want to advise Ghana to borrow, but we find ourselves in a very difficult time and every country needs help from the IMF and the World Bank and even from our sister countries.
“So, I feel the main issue here should be about efficiency and accountability. We have borrowed so much. When we went to HIPC, our public debt was about 5 billion as at 2006. Thirteen years down the line it has increased to 218 billion and that is ending December 2019”, he said.
He added that “we don’t seem to show much on the amount that we have borrowed. So, there’s always a question of efficiency and accountability. Are we going to use this IMF support for the intended purpose or is it going into somebody’s pocket?”
