Distressing!’ – John Mahama laments over economic woes

Former President John Dramani Mahama has lamented over the country’s economic challenges which in his view, get worse as the days go by.

In a Twitter post, Mahama indicated that the economic situation is “distressing” and called on the government to, promptly and with eagerness, secure a programme from the International Monetary Fund, IMF, to stabilize the economy.

“Distressing! Every passing day makes our economic situation worse. Gov’t must work with greater alacrity to lock in a programme with the Fund in order to create a more predictable economic outlook,” his post read.

The NDC flagbearer for the 2020 elections comments come after rating agency, Moody’s downgraded Ghana’s long-term issuer and senior unsecured debt ratings to CAA2 from CAA1 and placed the ratings on review for downgrade.

The CAA2 downgrade reflects Ghana’s recent macroeconomic deterioration, further heightening the government’s liquidity and debt sustainability difficulties and increasing the risk of default.

This follows the recent downgrade of Ghana’s credit rating to ‘CC’ from ‘CCC’ by Fitch.

Despite Ghana’s tightening of monetary policy in response to the global price shock, it said inflation continues to rise from high levels and the currency has been under very significant pressure, adding, “combined, a sharp rise in interest rates, high inflation and a rapidly weakening currency exacerbate the government’s debt challenges”.

“Without external support, the government’s policy levers to arrest a worsening macroeconomic backdrop and heavier debt burden are extremely limited; the government’s small revenue base, largely and increasingly absorbed by interest payments, further intensifies the policy dilemma between competing objectives, including servicing debt while meeting essential social needs. As a result, the risk of an eventual default has increased”, it pointed out.

Ghana is at the IMF for US$3 billion to help the country navigate through the hostile economic crisis it finds itself in as a result of the adverse effects of the deadly coronavirus pandemic and the ongoing conflict between Russia and Ukraine.

President Akufo-Addo has stated, on occasion, that “we have decided to seek the collaboration of the International Monetary Fund (IMF) to repair, in the short run, our public finances, which have taken a severe hit in very recent times as a result, whilst we continue to work on the medium to long-term structural changes that are at the heart of our goal of creating a Ghana Beyond Aid, that is building a resilient, robust Ghanaian economy.”

Distressing! Every passing day makes our economic situation worse. Gov’t must work with greater alacrity to lock in a programme with the Fund in order to create a more predictable economic outlook.

— John Dramani Mahama (@JDMahama) October 4, 2022