Resist arm twisting

-IMF MD cautions Ghana over Eurobond negotiations

By Daniel NONOR, Jubilee House-Accra

The Managing Director of the International Monetary Fund (IMF), Madam Kristalina Georgieva, has cautioned Ghana against yielding to arm twisting from Eurobond holders during the ongoing debt restructuring negotiations.

She stressed the importance of ensuring that any deal with Eurobond holders is fair, considering the domestic debt restructuring efforts that have already burdened Ghanaians.

Speaking during interactions with President Addo Dankwa Akufo-Addo, she underscored the need for Ghanaian officials to defend the country’s interests and reject any attempts at coercion.

Highlighting the risks of yielding to undue pressure, Madam Georgieva cited the example of Zambia, where private creditors exerted influence, leading to delays in reaching a deal.

She urged Ghana to prioritize completing negotiations with private creditors, emphasizing that any deal must be beneficial and not reverse the progress made.

Reflecting on the unexpected challenges posed by COVID-19, coupled with the Russia-Ukraine conflict and elections, Madam Georgieva emphasized the importance of building a strong foundation for sustained growth.

She noted the resilience of some countries to the impact of COVID-19, attributing it to sound banking systems, strong reserves, and other critical factors.

Madam Georgieva expressed confidence in Ghana’s economic prospects, noting the rebound in confidence both domestically and internationally.

She highlighted the importance of maintaining this momentum and cementing the progress achieved, citing better-than-expected growth and lower-than-expected inflation.

During her visit to Ghana, Madam Georgieva participated in an Artificial Intelligence (AI) conference organized by the Ministry of Finance and the IMF.

The event focused on the theme “AI as a Catalyst to Transform Economies in Sub-Saharan Africa,” highlighting the role of AI in driving economic transformation in the region.

President Akufo-Addo has staunchly defended Ghana’s decision to seek assistance from the IMF in July 2022, citing significant benefits and a positive turn in the country’s economy.

He emphasized the tangible improvements seen since seeking IMF support.

He highlighted the systematic decline in inflation, interest rates, and the stability of the exchange rate as key indicators of economic stabilization.

“The foundation being built for the future is very strong,” remarked President Akufo-Addo, expressing confidence in the arrangements made with the IMF and the positive trajectory of Ghana’s economic future.

Acknowledging the importance of staying the course outlined in their agreements, he stressed the need for continued commitment to the agreed-upon fundamentals to ensure rapid development and prosperity for the Ghanaian people.

President Akufo-Addo commended Madam Georgieva for her dedication and professionalism in addressing the challenges faced by countries like Ghana.

He noted her understanding of the unique circumstances of nations in similar situations and her efforts to provide assistance despite the difficulties.

Reflecting on Ghana’s history as the first sub-Saharan African country to gain independence, President Akufo-Addo emphasized the importance of the country’s journey aligning with the broader evolution of Africa since independence.

Over the past two years, Ghana and the IMF have reached staff-level agreements on economic policies and reforms supported by a new three-year arrangement under the Extended Credit Facility (ECF) worth approximately $3 billion.

The reform program aims to restore macroeconomic stability, ensure debt sustainability, protect vulnerable populations, preserve financial stability, and lay the groundwork for a strong and inclusive recovery.

The program includes fiscal consolidation, measures to reduce inflation, rebuild external buffers, and wide-ranging reforms to address structural weaknesses and enhance resilience to economic shocks.

President Akufo-Addo’s remarks underscore the importance of the partnership between Ghana and the IMF in driving sustainable economic growth and development in the country.