CANCHAM BUSINESS WEBINAR
Much has been heard of Ghana going to the IMF for a bailout to enable the country pay its debt. After three missions to Ghana for discussions, the IMF signed the bailout in May 2023 but the full checklist of the bailout is yet to be fulfilled. “After IMF bailout what next for businesses” was the theme for the Business webinar organized by the Canada Ghana Chamber of Commerce. A large number of both SMEs and large corporates patronized the webinar, as they were eager for accurate information from stakeholders and other institutions. The speaker for the webinar was Mr. Joe Jackson, Chief Strategist for Dalex Finance and Leasing Company. Mr. Jackson can best be described as a polymath – an individual whose knowledge spans a significant number of subjects; and he is known to draw on complex bodies of knowledge to solve specific problems. He is a leading economist and he provides expert analysis on the economy on multiple media platforms. He was inducted as a fellow of the Institute of Chartered Economists – Ghana in 2021. Speaking on the above topic, Mr. Joe Jackson highlighted four major areas for discussion: why bailout; the bailout story; Forecast; and Recommendations. In his view, Ghana went for a bailout due to excessive borrowing and the country’s inability to service its debts. The effect of the COVID-19 pandemic and the Russian – Ukraine war, he said further increased our debt as Ghana was compelled to borrow heavily to sustain the economy. The result of these effects led Ghana to an economic meltdown. Telling the bailout story, Mr. Jackson inferred that from the above indications, Ghana had no other option but to call on the IMF for help. Thus, on 1st July 2023, Ghana officially went to the IMF and by 6th July, the first IMF mission was already in Ghana. Ghana received the fastest bailout ever as by 22nd September and 1st of December, the second and third IMF missions were in Ghana respectively. Unfortunately, he continued, the country failed the debt sustainability analysis so on 5th December, Ghana was compelled to launch a domestic debt exchange program since she could not service her external debts but was servicing her domestic debts at very high interest. Mr. Jackson said Ghana applied to the G20 on the 12th of December for a common framework for debt restructuring and by the 19th of December the country had suspended payment for all external debts and had declared its inability to pay. By 31st March, Ghana had missed the first bailout deadline so finally, on May 17th, 2023, the bailout was signed and Ghana received $ 600 million from the IMF to help prevent the economy from collapsing until all the checklist of the IMF bailout is fulfilled. Mr. Jackson asserted that the bailout amount of USD 600 million was an emergency infusion to prevent a complete meltdown of the economy. In his forecast, Ghana’s interest rates will continue to remain high. Though inflation may drop to about 30%, it is still relatively high. The Cedi, he anticipates would depreciate to GHS 15 per $1 by close of the year when we begin to service our debt and pressure on the dollar begins to intensify. He recommends that investors and businesses hold on to their dollar and that to be wary of Government transactions. He also advised investors and businesses to exercise patience in their investment decisions, given the prevailing uncertainty and volatility in the economy and stressed the importance of cost reduction and maintaining lean operations in these challenging times.