05 May, 2021

Associate Professor of Finance at Andrews University in Michigan, USA, Dr. Williams Peprah, has advised the government to seek economic assistance programme from the International Monetary Fund to bring back life into the Ghanaian economy.

Former Finance Minister, Seth Tekper recently urged the government to consider a “Home Grown” or “External” programme to revitalize the economy which has been saddled with high debt and financing gap, partly due to covid-19 pandemic. The rippling effects are high fuel prices and increasing cost of living.

Dr. Williams Peprah who was formerly Head of Finance at Valley View University told Joy Business the country has no option than to return to the IMF.

“Though we are afraid of going to IMF, but probably where we find ourselves as a country we may have to look at that option as well. It is very clear we have not been able to raise money from within our country to support our programmes, so the next option is to look for an external party [multilateral institution] to come in. This is where we find ourselves”.

“I’m sure government is looking at it, but if the decision is not taken fast it will affect their programme. Government will not be able to focus on development, and if you look at the budget…it is very clear especially item one which is emolument and salary payment. From the way it is going, we need to break that cycle by getting an assistance from outside the country and our best bet goes to our good friend the IMF which I know also comes with some constraints”, he further outlined.

Continuing, Dr. Peprah said “we have to check the productivity and the numbers at our public service; there is a kind of mismatch there. So, IMF coming in will be looking at that normality; that’s the IMF’s strategy – they will first check your wage bill – and it’s also backed by economics which states that in time of distress the first thing you do is to cut your labour”.

Ghana renewed its marriage with the IMF in 2015 where it sought $918 million loan to help stabilise the economy.

There is no time to waste; seek for IMF support – government told

23 June, 2022

Associate Professor of Finance at Andrews University in the United States, Dr. Williams Kwasi Peprah, says time is running out for the government of Ghana to seek economic support or programme from the International Monetary Fund (IMF) since the economic fundamentals are deteriorating.

He is basing his argument on the fact that the country’s net reserves have declined drastically to $4.672 billion in April 2022, from $6.09 billion in January 2022. In February 2022 and March 2022, the country’s net reserves stood at $5.867 billion and $5.134 billion respectively.

Commenting on the dollar rationing by the Bank of Ghana to Bulk Oil Distributors reported by Bloomberg, Dr. Peprah advised the government to immediately seek an economic programme from the IMF to secure investor credibility for the economy and improve the weak fundamentals.

Dr. Peprah said the depleting foreign reserves of the country is of a great concern and requires the government to prioritise an IMF programme to save the economy from further troubles.

“As a country, we have to be thinking of going back to IMF to seek support in terms of getting foreign currencies to shore up our depleting gross international reserves and also our foreign currency reserves. So if you look at the issues as the BDCs request for foreign currency whereby the Central Bank is only giving them 22% of the $450 million required, it’s serious”.

“This is the only request coming from the BDCs. what about other extractive industries, the telecos”, he questioned.

He further mentioned that since government does not have the option of borrowing from the international capital market, the IMF is the only best option.

“In the past, the government would have gone to the international market to borrow one billion dollars but we don’t have that option now.”

Though government is getting one billion dollars from some international lenders, Dr. Peprah said that might not be enough.

He further added that “the issue of all this is that the black market will dominate the pricing of foreign currency because of the shortage and this will have an impact on our inflation computations. So we are going to see high inflation.”

I repeat, government must look at the option of going back to the IMF to seek for money for our international reserves”, he stated.

Government has been adamant in seeking for financial support from the IMF, but his comments by a Deputy Finance Minister, Dr. John Kumah presupposes government might consider returning to the Bretton Wood for financial support to save the economy from complications.

Any delay in getting an IMF programme will spell doom for economy – Government advised

August 11, 2021

Associate Professor of Finance at Andrews University in Michigan, USA, Dr. Willaims Preprah, has urged government to expedite action for an economic programme with the International Monetary Fund to boost confidence in the economy, since any delays will spell doom for the country.

This is coming days after ratings agency, S&P and Fitch downgraded Ghana’s credit rating to junk status.

Dr. Peprah believes an economic programme should bring in some inflows to shore up the country’s balance of payment and help stabilise the cedi and slow down inflation.

According to him, waiting until the second quarter of next year before securing the programme will not be good for the economy

“The second quarter of next year probably will be a little bit too late for Ghana, because if we look at the data that was issued by Bank of Ghana, already balance of payments is about -$2.4 billion, which is about 3.5% of our GDP. Our revenue generation internally is not picking up as expected because the E-levy has failed. So if the fund delays the impact will be very dire for us as a country”.

“I notice also that based on the report the government is also a little bit slow in submitting this whole programme to the Fund. And this probably may be the reason why the fund will delay because initially it was anticipated that any amount that will be approved for Ghana should come in within the first quarter [2022]; because if you don’t get the funds coming in the first quarter trouble”, he pointed out.

He also expressed worry about the liquidation of some government bonds by foreign investors, a reason why he wants the government to get an economic programme with the IMF programme urgently.

“Already, there’re lot of claim payments by companies within the country; and then also government’s own commitment in terms of paying off [principal amount] some of the Eurobonds which will be due is a challenge”.

Again, he said “though government is expecting about first the $750 million to hit the Bank of Ghana’s account and then also the cocoa syndication loan of about $1.5 billion; and putting this together gives about roughly say $2.25 billion. It will not be enough because currently, we are already in a negative balance of $2.4 billion”.

So, therefore, Dr Peprah, said if the programme is pushed to the second quarter of 2022, the cedi will depreciate further.

“Probably, I’m expecting that maybe the Central Bank will come out with some measures to compel most of the companies that are involved in exports to bring in some of the monies that they keep outside the country. And you know in our laws, we allow free-zone companies and these multinationals who are involved in exporting products from Ghana to keep some of the funds here.”