Ghana Changes Mind on IMF Bailout Days After Residents Staged Protests Against Worsening Economic Situation – Bitcoin News

Ghana’s government, according to some reports has changed its mind. They will seek financial help from the International Monetary Fund. This decision came just days after protestors took to the streets against spiraling inflation, economic hardships and other inexorable circumstances.

Ghana’s Growing Balance of Payments Deficit

After initially refusing to seek the International Monetary Fund (IMF)’s support, the Ghanaian government has said it will now hold formal talks with the financial institution, a report has said. According to the report, the government’s decision followed a conversation between President Nana Akufo-Addo and the IMF’s managing director, Kristalina Georgieva.

As per the report, the government’s about-face comes after Ghana’s inflation rate, which topped 27.6% in May, as well as the deteriorating economic situation, helped spark street protests across the country in late June. Ghana’s apparent volte-face also came less than two months after the central bank hiked main interest rates by 200 basis points to 19%.

Ghana is facing a spiraling inflation rate and a negative balance in payments. It reached $934.5million during the first quarter 2022. In the first quarter of 2021, the country’s balance of payments deficit was $429.9 million.

It’s almost inevitable to make a decision

Meanwhile, the analyst quoted in the report praised Ghana’s decision, which they believe will help its economy. Commenting on the government’s decision to seek a bailout package from the IMF, Razia Khan of Standard Chartered said this was “positive news.” Another analyst, Leslie Dwight Mensah from the Accra-based Institute for Fiscal Studies, said:

Given the existing economic crisis and the risk of an external balance of payment crisis, this decision was nearly inevitable.

Mensah also hinted that talks with the IMF could potentially boost investors’ confidence in the country’s ability to meet its obligations. In the meantime, another report quotes an IMF spokesperson who pledges the institution’s readiness to help “Ghana to restore macroeconomics stability; safeguard debt sustainability, promote inclusive and sustainable growth and address the impact of the war in Ukraine and the lingering pandemic.”

Ghana, which is West Africa’s second largest economy and one of the continent’s biggest producers of gold, has been reeling from the effects of the global pandemic and is reportedly close to a debt crisis.

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Terence Zimwara

Terence Zimwara, a Zimbabwean journalist, writer and author who has been awarded the Zimbabwe Booker Prize. His work has covered both the economic woes of African countries, as well as digital currencies that can be used to provide an escape path for Africans.