Dr. Julius Kattah, a Ghanaian economist and lecturer, has recommended the country to exercise caution in order to avoid losing the next tranche of the International Monetary Fund-approved loan.
The lecturer stated that countries seeking loans from the IMF must adhere to specific conditionalities.
He explained that even when applications are approved and you fail along the line to meet these conditionalities, your approval can be withdrawn.
Dr. Kattah, speaking on Frontline on Rainbow Radio 87.5 FM, stated that countries that borrow from the IMF are expected to adjust their economic policies to overcome the problems that led them to seek financial assistance.
The adjustments he posited are part of the conditions that will allow the IMF to approve the application since they will help the country adopt strong and effective policies.
In the case of Ghana, he lamented that our leaders have failed to ensure transparency, accountability, fiscal discipline, and prudent spending.
According to Dr. Kattah, some of the major challenges that caused the economic turmoil in the country leading us to the IMF were over-expenditure, fiscal indiscipline, and a lack of transparency.
The government, the largest consumer, can provide relief by cutting excessive spending, but if they continue to overspend, the economy will suffer.
He stressed that “getting the IMF to approve a loan application is not automatic. It requires meeting some conditionalities. Fiscal discipline and positive indicators, as well as transparent and accountable governance, are key requirements.
The conditionalities of the IMF are to ensure that the applicants solve balance of payments problems without resorting to measures that harm national or international prosperity. Aside from that, the conditionalities are in place with the objective of ensuring that the country’s finances will be strong enough to repay the loan, allowing other countries to use the resources if needed in the future.”
Dr. Kattah asserted that “borrowing is not necessarily a problem if the loans are put to productive use, which will later provide returns, and not used for unproductive policies that have the potential to worsen debt levels and send the economy on a loose end. Our debts are too much. If we are unable to reduce our debt levels, it could affect our next tranche. The fact of the matter is that borrowing is not a major problem, but management of the borrowing is the problem. You borrow to put it into productive ventures with the potential to give you returns. You don’t borrow and use the money for productive ventures.”
He told host Kwabena Agyapong that “Ghana has the responsibility of selecting, designing, and implementing policies to make their economic programme successful.
The overall objective here is that the IMF programme is to restore or maintain balance of payments viability and macroeconomic stability while setting the stage for sustained, high-quality growth. That is why I am advising the government to maintain discipline so we don’t get to the point where our application will be withdrawn.”
By: Rainbowradioonline.com/Ghana
