‘GHANA HAS BEEN HIT BY A QUADRUPLE CATASTROPHE REASON FOR THE IMF’ — Bawumia

According to Vice President Dr. Mahamudu Bawumia, Ghana has recently experienced a quadruple calamity, requiring the country to request IMF assistance (IMF).
Dr. Bawumia claimed that if not for this quadruple tragedy, the country wouldn’t require the IMF.

According to him, the nation sought Bretton Woods support as a result of excess capacity payments in the energy sector, banking sector cleanup, COVID-19, and the Russia-Ukraine crisis.

On Thursday, July 14, Dr. Bawumia discussed the relevance of IT education in the government’s digitalization goal during a speech at the Accra Business School. According to him, the take-or-pay contracts’ legacy of excess capacity payments totaling GHC 17 billion burdened the national economy with annual excess capacity fees of nearly US$1 billion.

According to Dr. Bawumia, contracts exist to give Ghana more electricity, but we are still responsible for paying for it whether Ghana uses it or not.

The excess capacity payments include GHC 7 billion in gas payments made to ENI Sankofa under the previous administration’s take-or-pay agreement, which was substantially more than what was necessary at the time.

GHC 54.0 billion (about $7 billion), which was spent on three things, was borrowed.

The Ministry of Finance estimates that these three loans will have annual interest costs of GHC 8.5 billion. He asserted that this represented 23% of Ghana’s annual GHC 37 billion interest payments.

By the end of 2021, Ghana’s debt to GDP would be 68 percent rather than 76.6 percent if it weren’t for the GHC 54.0 billion debt for COVID-19, the financial sector, and the energy sector.

Ghana won’t require the IMF since its fiscal, debt, and BOP prospects are sustainable if the fiscal impact of this triple whammy is removed.

Two were caused by external factors (COVID-19 and the conflict between Russia and Ukraine), while two (cleaning up the banking system and surplus capacity payments) were the result of earlier government actions.

According to current circumstances, Vice President Bawumia declared that there is no end in sight to the Russia-Ukraine conflict. Although we hope the conflict may be resolved quickly, things might first get worse.

“We need to be more self-reliant as a nation,” he remarked. We must make judgments that benefit the nation whether we use the IMF or not.

source;NKONKONSA.com