‘None of Ghana’s previous 17 IMF bailouts restored anything, they all failed’ – US economist

Professor of Economics at Johns Hopkins University in the USA, Steve Hanke, has again questioned government’s decision to enter an economic support programme with the International Monetary Fund.

Last week, President Akufo-Addo defended the decision by stating that a possible bailout from the Bretton Woods institution will in the short-run repair Ghana’s public finances which have been impacted significantly by recent economic developments.

“In our case, we have decided to see the collaboration with the International Monetary Fund to repair in the short run, our public finances, which have taken a severe hit in very recent times,” President Akufo-Addo earlier said.

Reacting to the comments, Professor Steve Hanke, who has been an ardent critic of government’s decision to enter an IMF programme, opined that the move will not save the Ghanaian economy nor will it restore public finances.

He argued that the previous 17 IMF programmes that Ghana has participated in, never restored anything in the economy as they all failed.

“Ghana’s President Akufo-Addo says an IMF bailout is “necessary to restore public finances.” SPOILER ALERT: None of Ghana’s previous 17 IMF bailouts restored anything. They all failed,” he wrote via Twitter on July 11.

Meanwhile, it would not be the first time Professor Steve Hanke has painted a gloomy picture of Ghana’s economic indicators.

Most recently on July 9, he pegged Ghana’s inflation rate at 50%/year, describing the status as terrible.

The 79-year-old economist has also described the Ghanaian cedi as a ‘central bank junk currency’ – simply means its value is unreliable on both the international and domestic markets.

In an earlier tweet on July 10, the US-based economist ranked the Ghana cedi in 16th place out of 18 other currencies on his Currency Watchlist – due to the persistent depreciation of the currency against others.

“By my calculations, the Ghana cedi has depreciated 29.5% against the USD since January 2020. The Ghanaian cedi is a central bank junk currency,” he shared on Twitter.

The government of Ghana on July 1 made a U-turn on its strong position of not seeking support from IMF amid an economic downturn.

A team from the IMF arrived in the country on July 5 and have since been engaging Ghanaian authorities for a programme aimed at restoring macroeconomic stability and safeguarding debt sustainability among many others.

The team is led by Carlo Sdralevich, mission chief for Ghana.