IMF Extn. Uncertain – Bokpin

Economist, Professor Godfred  Bokpin believes President Mahama’s decision to immediately rule out an extension of the IMF program, is a tactical one.

The President has affirmed that his administration has no immediate plans to extend Ghana’s current $3 billion Extended Credit Facility (ECF) with the International Monetary Fund (IMF).

Speaking in an interview with Bloomberg TV at the Munich Security Conference last Monday, President Mahama clarified that while future extensions remain an option; his government is presently committed to adhering to the existing programme.

President Mahama also outlined key proposals his administration presented to the IMF during their recent discussions, emphasizing the government’s commitment to addressing Ghana’s economic challenges while ensuring the success of the ongoing ECF arrangement.

In an interview with the New Finder, Dr. Bopkin stated the importance of conducting a proper review of the program, but believes President Mahama’s approach comes across as a tactical one

“Perhaps, I want to believe that the president or government overall is considering a number of options and what is refreshing is that the president has committed to seeing out the program till the end of May 2026. According to him, more clarity will be brought to bear in the course of the year on what happens post program 2026 when government begins to roll out implementations “It is not our view that the economy will be in the position to do away with IMF program post May 2026”, Mr. Bopkin said. He also revealed the risk and uncertainty that comes with exiting the program in May 2026, stating that government may not be able to manage it well considering the structure of the original design, which was made with an extension in mind.  “We are supposed to reach debt sustainability by 2028 and by then we would have exited the IMF support program and it will be more in the interest of the country and the economy to extend”, he explained.

“I also want to believe that perhaps it is too early for the President to signal that to the masses so to that extent it is also part of the strategy to say we just took over, we want to review the programme and we also want to how we have performed because when it comes to year-end figures and all of that, they are trickling in so when government has gotten the total overview of the economy, the fiscal situation and the outlook, I am sure some kind of direction will be made so I want to believe that the president doesn’t want to probably jump the gun and its early days yet”.

The $3 billion ECF, approved on May 17, 2023, spans three years and is designed to support Ghana’s economic stability and growth. Discussions with the IMF focused on tax rationalization, debt management, and fiscal prudence—critical areas for strengthening Ghana’s economic recovery.

Tax Reforms for Sustainable Revenue Growth

A central aspect of the engagement with the IMF was tax rationalization. President Mahama criticized the previous administration’s approach of imposing multiple taxes, arguing that it had led to diminishing returns, as increased tax burdens resulted in lower revenue collection.

To support these efforts, President Mahama revealed that the IMF has agreed to provide technical assistance in streamlining Ghana’s tax system, ensuring efficiency and improved compliance for businesses and individuals

Managing Debt and Promoting Fiscal Discipline

Addressing Ghana’s ongoing debt restructuring efforts, President Mahama acknowledged the significant repayments due this year, particularly domestic debt obligations exceeding $15 billion in 2025. He highlighted his administration’s proactive measures to manage these challenges, including reactivating the country’s sinking fund to facilitate debt repayments.

Looking Ahead: Budget Presentation and IMF Review

As part of Ghana’s economic roadmap, President Mahama highlighted the upcoming budget presentation in March, which will incorporate insights from the IMF’s latest staff review. The fourth IMF review is scheduled for April, and the government is aligning its fiscal policies with recommendations from the ongoing assessments. Despite economic challenges, President Mahama expressed confidence in Ghana’s relationship with the IMF, describing it as “cordial.” He reiterated his administration’s commitment to maintaining this partnership, ensuring the successful implementation of the ECF programme, and steering the country towards economic stability and growth.