The world is in a difficult moment. After the pandemic and with the war in Ukraine, the price of food and fuel is going up and money is worth less than it was.
In addition, investors have lost their appetite for risk, and this means that less money is being invested into developing continents like Africa.
The Ghanaian government, specifically, has also had to spend large sums to clean up an inherited banking sector crisis and expensive energy contracts signed pre-2012.
These four challenges are both serious and unexpected and have made an IMF deal the sensible next step for Ghana.
A loan from the IMF will do two important things: First, it will help the government to continue investing in Ghana’s education, healthcare, and infrastructure.
Second, the loan will give investors confidence to continue to invest in Ghana – this is very important for the country’s continued economic growth.
A loan from the IMF also makes sense as the IMF won’t ask for too much.
Ghana can pay back the loan slowly, bit by bit. This is unlike borrowing from foreign banks where it costs more to borrow.
So, the government can take the loan, invest it in Ghana, and not have to hand over a great deal of money to do so.
It should be said that Ghana is not alone in talking about a deal with the IMF – many African countries and many countries across the world are also talking to the IMF.
The pandemic and the war in Ukraine has damaged the West, Africa, and Asia. This is the time for all countries to work with international organizations to keep their economies strong.
Ghana is no different and a deal with the IMF will put the wind back behind Ghana’s economy.