Ghana Goes to IMF: What Does This Mean for the Country?
Ghana’s government announced that it will turn to the International Monetary Fund (IMF) in order to help stabilize the country’s weak economy.
The announcement came on July 1, 2022 and marks the second time in five years that Ghana has sought financial assistance from the IMF in response to low reserves of foreign currency and slowing GDP growth.
Ghana’s new President Nana Akufo-Addo, who took office on January 7, 2016, said he will work with the IMF to promote economic development and fight poverty through needed structural reforms that are likely to be unpopular with the population.
Why does Ghana need IMF help?
In July 1, 2022, Ghana’s president Nana Akufo-Addo announced his country would be seeking financial aid from an international lender.
But why does Ghana need IMF help? And how will it affect ordinary people in their daily lives?
What does it mean for you?
Ghana requested a $918 million loan from the IMF at the beginning of 2015 to help stabilize the economy.
A three-part approach was created by IMF experts in collaboration with the government of Ghana to Restore debt sustainability.
Economists are speculating that Ghana has a 50% chance of defaulting on its debts within two years.
If Ghana were to default, it would likely lead investors and other nations to question whether some African countries could be trusted with debt.
How can you prepare for this decision by government?
For individuals, it will be difficult. If you’re a Ghanaian business person, you may want to take your money out of banks and put it in cash or some sort of foreign currency (like U.S. dollars).
In fact, if you want to hedge against future price fluctuations that may accompany devaluation for example, if inflation picks up as a result of debt payments putting your wealth into gold or silver is an option.
What occurs when a nation approaches the IMF?
By taking out a loan from the IMF, a nation commits to changing its economic policies in order to address the issues that prompted the request for assistance.
These changes in policy are prerequisites for IMF loans and assure that the nation will be able to pay back the IMF.
What takes place when a nation consults the IMF?
When a nation takes out a loan from the IMF, its government stipulates that it will modify its economic policies to address the issues that prompted the request for financial assistance.
To assure that the government will be able to repay the IMF, these policy changes are prerequisites for IMF loans. Check the policy here Ghana and the IMF
Full details here [Check Confirmation Letter]
This is covered in Ghana Goes to IMF: What Does This Mean for the Country?