In a manner akin to the old folkloric drama ‘I told you so’, emerging details are revealing that when it became apparent that government might have to turn to the International Monitory Fund (IMF) for succour, precisely what intervention government was to sought was suggested by an economist but handlers of government business overlooked it.
As far back as March 2021, economist Antwi Boasiako, advocated for Ghana to go for a 2-year debt service suspension package for twenty-four (24) months to save the ailing economy.
A year and many months down the line, the president of the Fund, David Malpass, is disappointed that Ghana and Nigeria did not to sign up for the Debt Service Suspension Initiative (DSSI).
Established in May 2020, the DSSI expired at the end of December 2021.
The DSSI, put together by the International Monetary Fund (IMF) and World Bank offered countries an opportunity to freeze debt servicing, while they concentrate on using their minimum funds to deal with other commitments.
Mr. Malpass was responding to questions at a programme in Washington DC, on suggestions that the Bretton Wood institutions are not doing enough to help cancel the debts of some African countries in distress.
But reacting to the question, he pointed out that Ghana and Nigeria failed to apply for the DSSI, which would have provided some financial space for the repayment of loans.
Mr. Malpass stated that such initiatives are designed to help reduce the impact of economic hardship on developing countries.
Captured in a document he titled “Vision 24”, the political and economic analyst suggested clearly how government could go about the debt service suspension and even sent it via WhatsApp to a government official (name withheld) who acknowledged received but never acted on it.
“I feel angry that government ignored this initiative that could, together with other measures, have saved the economy and the free-falling Cedi,” Mr. Antwi Boasiako stated yesterday.
However, two basic reasons, Antwi Boasiako said, could be the reason government never opted for the debt service suspension initiative, one being the debt sustainability analysis and the other, plain arrogance.
Read Mr. Boasiako’s reasons:
- Debt Sustainability Analysis *(DSA)*
Government did not want to be exposed to be in a situation of debt unsustainability and would have had to institute policies aimed at debt sustainability, denying them of the reckless borrowing and spending that they had become accustomed to. Applying for the DSSI would have forced government to undertake a DSA that would include the financial sector clean-up costs and the energy sector legacy debts to government debts, and thereby show overall government debt level as unsustainable. With that, government would have been compelled to implement policies/measures to bring our debt to sustainable levels over a period, something this government was not willing to implement, given their addiction to Eurobonds. Sadly, they are going to do the very DSA and implement the very policies they didn’t want to do to save the economy and the Cedi, now doing so under circumstances of a failing economy and a free-falling Cedi. They could have done it when they had control of the situation.
- Arrogance
Having ridiculed President Mahama and his government for going to the IMF in 2015, this government did not want to have anything to do with the IMF and the World Bank. Ken Ofori-Atta, even when the signs were on the wall that going to the IMF was inevitable, was saying that Ghana was a proud country that would not go to the IMF. The pride and arrogance of government made them to not apply for the DSSI, when it was clear Ghana was going to suffer bigtime for not doing so.
Stay tuned
