Ghana: political costs of structural adjustment

31 January 2017

In December 2016 Nana Akufo-Addo succeeded John Mahama as president-elect of Ghana. Peter Suaka, of news site Modern Ghana, argued that the election was a “vote of rejection of the IMF’s direct control of Ghana”. In April 2015 Mahama’s administration accepted a near $1 billion loan programme from the IMF (see Observer Autumn 2016), which Akufo-Addo pledged to review, promising to cut taxes and increase spending. According to Suaka, Ghana’s programme included policy conditions commonly prescribed by the IMF that disproportionately impact the most vulnerable, including subsidy cuts for utilities, public wage bill freezes and tax increases.

Moreover the IMF’s insistence that the Ghanaian government not finance its budget from the Bank of Ghana, also referred to as “zero financing”, has also been criticised. Newman Kusi of the Institute of Fiscal Studies of Ghana told news site B&FT online in December that the measure was premature, “not in the interest of the country” and does not make any sense in the Ghanaian context. In September, ahead of the election, the Ghanaian government issued a fifth Eurobond which Peter Quartey of the University of Ghana argued was a response to this restriction and aimed to “raise money to close the resulting revenue gap”. News agency Bloomberg similarly described the Eurobond as an effort by the Ghanaian government to “loosen the IMF’s straitjacket ahead of the elections”, explaining that the bond issuance means Ghana can delay calling on the next tranche of the IMF programme.

In January, Yaw Osafo Marfo of the new Akufo-Addo administration said that “the IMF programme will certainly be reviewed” because “the current programme literally squeezes all the fiscal spaces” the president needs to implement his political programme, according to news site Africa Daily Report.