IMF reluctant to approve bailout because of huge budget deficit – Prof. Bokpin

Economist, Professor Godfred Bokpin, says the International Monetary Fund’s Executive Board’s seeming reluctance to approve Ghana’s $3 billion bailout is due to the country’s huge budget deficit.

According to him, the country’s 2023 budget deficit alone stands at $5 billion which is $2 billion dollars more than the IMF bailout.

He stated that the only reason Ghana managed to secure a staff-level agreement is probably due to pressure from Washington following Ghana’s recent courting of the US’ favour in pursuing an IMF bailout.

“And I think that in all of this it’s obvious now that the hole that has to be closed is so big, and it’s the reason why the IMF doesn’t want to approve the programme,” he said.

He explained that “if you pick the deficit in 2023 alone, in the budget as approved by the IMF in dollar terms, using Bank of Ghana’s official exchange rate, it’s more than $5 billion to close.

“Meanwhile, if you approve the programme this year, the gap in this year’s budget alone is more than what the IMF programme would bring over three years.

“So the IMF knows very well that without assurance, of either debt relief or fresh funding from Ghana’s multilateral and bilateral partners the programme can only achieve limited effect.”