Main reasons why Ghana is seeking a fresh IMF rescue program

The primary motivations behind Ghana's request for a fresh rescue package from the IMF

Ghana will discuss a support package with the International Monetary Fund (IMF).

Despite the severe economic collapse of the previous six months, the Nana Addo Dankwa Akufo-Addo administration had initially hesitated to request a bailout from the IMF. However, it ultimately chose to swallow its pride and request assistance from the Bretton Woods organization.

These are the primary causes for which the government has now abandoned its own plans and chosen IMF assistance to revive the faltering Ghanaian economy.

Bad financial management

The fiscal and economic fundamentals of Ghana have shown to be weak and have gotten worse recently. Ghana receives less funding than it requires.

As of the end of the first quarter of 2022, the total public debt stock was GHS 391.9 billion, or 78 percent of GDP.

In 2022, the cedi has likewise lost 22 percent of its value versus the dollar. As a result, it now holds the distinction of being the African currency that has performed the poorest.
Unsatisfactory international credit

Due to weak ratings from rating agencies for Ghana’s economy, the country is unable to borrow money.

Due to Ghana’s deficits, foreign lenders with access to capital who may lend to Ghana lack confidence in the country’s economy. This indicates that in order to establish trust with foreign lenders, the administration was forced to turn to the IMF.

Global problems

The coronavirus outbreak and the ensuing economic crisis have devastated Ghana. Global supply networks have been hampered by the conflict in Ukraine. Gas, oil, and agricultural raw resources all cost more as a result of the battle.

Nearly one-third of the wheat imported into Africa comes from Russia and Ukraine.
Organization of the economy

The small, open economy of Ghana lacks sufficient diversity. It still depends on the export of basic materials like cocoa and gold. This implies that it will always be vulnerable to shocks like the Ukrainian War.

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