Alternatives to IMF conditionalities for economic development in Ghana


Over the past 65 years, Ghana has faced periods of large fiscal and external imbalances that have led to high inflation, declining reserves, depreciation of the Cedi, and high interest rates.

During such episodes, the country has had to turn to the International Monetary Fund (IMF) for a financial bailout. Ghana’s latest approach to the IMF is the 17th since the country gained its independence in 1957. (ACET; 2022)

 Since the start of the Fourth Republic in 1993, the country has had to grapple with large fiscal deficits, frequent sharp debt build-ups, recurring large debt service costs, and low public investment. Managing the onerous debt service burden has become one of the biggest fiscal policy challenges facing the current government culminating in painful domestic debt restructuring, one of the prior conditions for the latest IMF program which process was initiated in July 2022 and was approved as if by design on May 17, 2023. For the politically savvy among us, Ghana’s task is not so much breaking the 8 as it is breaking the 17.


The country’s most recent programmes were in 2003, 2009, and 2015, and, like those before them, they failed to transform the post-colonial economy into a dynamic and resilient one that is able to withstand any shocks, including pandemics, external wars, or a rising dollar.

The stated objectives of the latest program may be different in form, but essential the same in substance namely to achieve some form of macroeconomic stability.

Having been portrayed as an adjustment success story in the 1990s, Ghana was denied renewal of IMF financial assistance at the end of 2002 after failing to implement conditions in its Poverty Reduction and Growth Facility agreement with the Fund.

In May 2003 Ghana was given a three-year PRGF arrangement in support of poverty reduction strategy and to take care of fiscal slippage in the amount of US$274.20 million. The arrangement was later extended until October 31, 2006 (IMF).

Not too long after that, highly expansionary fiscal policy destabilized the economy in 2008 (an election year) with the fiscal deficit rising to 14.5 percent of GDP, inflation to 20 percent, the currency depreciating by 50 percent against the dollar, and official reserves fell to 2 months’ import cover. The Prof. Mills government in 2009, then turned to the IMF for financial support. The three-year economic program worth $513 million, once again focused on fiscal adjustment and on reforms to budget management to prepare Ghana for the transition to oil producer status.

In 2014, power crisis popularly known as dumsor threw Ghana into economic challenges under the John Mahama government and by 2015 the country returned to IMF for support. The Fund approved a three-year program aimed at achieving policy credibility for the government to among other things restore debt sustainability to support a reform program aimed at faster growth and job creation while protecting social spending. The program inevitably led to limiting employment and wage increase and eliminating utility and petroleum subsidies.

The current program is premised on the fact that the impact of the COVID-19 pandemic, tightening global financial conditions, and Russia’s war in Ukraine exacerbated pre-existing fiscal and debt vulnerabilities, resulting in a loss of international market access. Increasingly constrained domestic financing and reliance on monetary financing of the government, decreasing international reserves, Cedi depreciation, rising inflation and plummeting domestic investor confidence, eventually triggering an acute crisis. (IMF)

So, while the main protagonists, with different president/finance minister combinations; Kufuor/Osafo Marfo, Mills/Duffuor/, Mahama/Terkper and Akuffo-Addo/ Ofori Atta, the script is essentially the same.



It is important to point out that however that Ghana is not alone in its most recent resort to the IMF; already African nations including Zambia, Ethiopia, Chad and Egypt have applied for debt relief using the Group of 20’s Common Framework mechanism.

By March 2023, the IMF had lending arrangements with 21 nations in the region and many program requests, according to the IMFs Regional Economic Outlook Report,The Big Funding Squeeze.”

The report noted that rising interest rates have increased borrowing costs for sub-Saharan African nations adding that not a single country in the region had been able to raise financing through a dollar bond sale over the past year.

Even before the coronavirus pandemic struck, many African countries were burdened by budget deficits and high levels of debt, and didn’t have as much fiscal firepower to provide relief measures or stimulate their economies as developed markets.

The regularity with which Ghana resorts to the fund for support and the fact that so many countries in the global south, in particular Africa, have had to seek help from the Bretton-Woods institution, should point to us that much more is going on here than simply lack of fiscal discipline by African governments.



A careful analysis of the situation, reveals much more ideological, cultural, philosophical and historical factors that a 20-minute speech cannot adequately discuss.

Fund programmes are typically short-term and based on analytical tools and policy prescriptions that are ill-suited, often counter-productive, for a post-colonial economy like Ghana’s, which was structured to serve external interests, not improve the living conditions of its people. (Thompson; 2022)


The Fund’s debt sustainability analysis, for example, focuses almost entirely on how to service current and future debts (including debt owed to the Fund) and ignores the more fundamental question of how some of the debt came to be in the first place. A careful examination of our debts over the past 20 years would show a worrying shift from concessionary to non-concessionary loans, from cheaper bilateral and multi-lateral credit to more expensive commercial arrangements including Eurobonds, which increase the country’s vulnerability to the international capital markets.

Additionally, the IMF, working with distressed country governments, tends to focus predominantly on Macroeconomic stability as a prelude to economic growth, as against real structural transformation which involves moving labour from low to higher productive activities like from agriculture to manufacturing and within sectors like from subsistence farming to high-value crops.

This structural transformation will not happen if a country does not strive for monetary and financial sovereignty, which I will proceed to discuss briefly.

Most of the countries referred to above are facing different levels of debt crises, with the external (mostly dollar denominated) component growing significantly.



 For a country to be economically sovereign, it must reduce its vulnerability to external debts. A common feature of most of these countries, with Ghana being no exception is that they tend to be dependent on imported food and imported fuel to power their plants and move their vehicles.

Based on recommendations from the World Bank during the structural adjustment program, Ghana was advised to concentrate on the production and export of so-called high value cash crops like cocoa to the neglect of food crops like rice, maize and the production of poultry and livestock to feed itself. This led to the country spending scare USD on importing food every year, while we prioritise producing so called high value cash crops like cocoa and cashew, which we don’t eat.

According to ministry of finance sources, Ghana’s import of essential food commodities reached an average of $2 billion dollars each year. Key foodstuffs imported include rice, poultry, sugar, and tomatoes comprise a chunk of the imports.

In relation to energy, Ghana imported $1 billion in refined petroleum in 2021, becoming the 95th largest importer of refined petroleum in the word, creating large trade deficits as we export raw materials and mostly low value-added products

Refined petroleum and food imports alone average $3 billion per annum, the same amount of money we are getting from the IMF for the next 3 years.

These imports put pressure on the Ghana Cedi as the country looks for more USD to bring the products in. As the Cedi loses value, the government borrows more USD either through Eurobonds or the Central Bank using its reserves to artificially prop up the Cedi, leading to not just higher external debt but also imported inflation as prices of these imported commodities keep rising, causing a higher cost of living. Government in an attempt to intervene inevitably spends more and more leading to large fiscal deficits and more debt.

The country tries to attract this by attracting FDI, which usually comes in the form of large multinational companies, that we give unreasonably favourable terms to, and who repatriate all their profit to their home countries, further putting pressure on the already limited dollars. The country’s attempt to attract capital to its capital markets also only tend to attract high return seeking speculative investors who ditch our markets as soon as more favourable terms appear when the Fed hikes its interest rates and further worsen our exchange rate as we saw in the 3rd quarter of 2022.

So, when the IMF team comes to town with its cocktail of policy prescriptions, of “living within our means, and cutting spending etc, they seem very obvious to right thinking people, but what we all miss is that the conditionalities characterised as prior actions and structural benchmarks, do not actually address the fundamental and structural reasons why we keep failing every year, and most often only go to worsen the plight of the citizens.

For example, some of the prior actions in this IMF Program include:

  • Three new taxes (mostly regressive)
  • Utility tariff hikes (2 rounds in less than 6 months, resulting in a cumulative increase of 57% since 2022)
  • And an MOU between MOF/BOG to stop monetary financing as a prelude to amending the BOG law (while tightening the central bank’s inflation targeting framework)

These actions are at best palliatives that patch up deeper structural wounds that require a fundamental shift in the way our economy is set up.

The real alternative to the IMF comprises a mix of policies that will enhance economic and monetary sovereignty by de-dollarizing using three key policy actions.



The agriculture sector of Ghana is highly vulnerable to climate variability and change as the sector is primarily dependent on rainfall. As a result, the sector is characterized by low productivity levels. Erratic precipitation patterns have severe consequences for productivity as only 2% of the country’s irrigation potential is in use; the majority of Ghana’s agriculture remains reliant on ran-fed production. 2.5 million hectares of Ghana’s land is arable.

Compare this to Israel; a major exporter of fresh produce and a world leader in Agric technologies despite the fact that the geography of the country is not fully conducive to agriculture. More than half of the land area is desert and the climate and lack of water do not favour farming.  Israel with arable land size of 185,000 hectares produces 95% of its food needs, while Ghana with arable land size of 2.5 million hectares, imports most of its essential foods including rice, tomatoes and chicken.

Farmers in Israel have grown more with less water, using an average of 12% less water to produce 26% more food than its peers. While farmworkers make us only 3.7% of the labour force, the country produces 95% of its own food, Ghana on the other hand reported close to 30% of total employees working in that sector, imports most of its essential food.

If Israel, a country the size of Ashanti region in a desert climate can produce enough food to feed itself why can’t Ghana do same?’



Energy sovereignty refers to a nation’s ability to meet its energy needs through sustainable and renewable resources, reducing or eliminating dependence on imported fossil fuels.

As mentioned earlier, Ghana’s energy mix, though blessed with hydroelectric generation, is increasingly dependent on imported fossil fuels which heighten our petrodollar dependence, our main oil refinery has been non-functional for years as we spend up to billion USD every year importing finished products.

Our hydro and solar potential have not been fully harnessed, and even the gas the we generate from our western enclave is mostly flared instead of investing in processing that could harness it for power generation.

The case of Costa Rica presents a good learning example. The country made impressive strides in renewable energy generation, with renewables accounting for over 985 of its electricity production. In 2012, the country achieved a major milestone by running entirely on renewable energy for 300 consecutive days. This shift towards renewables has reduced the county’s carbon footprint and dependency on fossil fuel imports, bringing with it economic benefits like job creation in the renewable sector and reduced energy costs for consumers.

There is no reason why Ghana cannot do same. We have an abundance of water resources, and our solar potential has barely been scratched. We cannot keep spend our scarce foreign reserves importing refined products to the detriment of developing our renewable energy resources.



 Our quest to break the 17 time cycle must also consider value added exports and  manufacturing akin to what is happening in Vietnam, a country that not too long ago suffered a brutal war, is seeing economic development using  an export-oriented approach, focusing on manufacturing and export industries such as textiles, electronics, footwear and agricultural products, and by so doing benefitting from global supply chain integration and becoming an important player in the global manufacturing network.

Ghana has no reason not to do same!

The informal sector makes up 90.0% of all enterprises and accounts for about 70.0% of employment but contributes only 26.0% of GDP – This suggests low productivity and low incomes, especially for the 67.0% of the labour force involved in survivalist activities like petty trading. The  sector needs to be transformed to raise productivity, household incomes, and living standards. This can only happen with better investment in skills training particularly of the Technical and Vocational type.



 Which brings me to my final point, Education. What we are seeing today with this graduation is the product of investment in high quality education that will create the manpower that Ghana needs to industrialize and be globally competitive. When I look at the quality of your faculty and emphasis of your programs, the practicality and job and experience centered approach the Accra Business School adopts, I have no doubt that in this hall today are an important part of the critical mass of business leaders we need to make our companies more effective and efficient and ultimately more competitive globally.

The school’s philosophy is instructive in this regard; “Long-term democratic stability hinges on rapid economic development led by a strong private sector. To sustain the emerging democracies in Africa we need a new breed of business leaders, educated to global standards who can create jobs, increase incomes, and reduce poverty,”

This should absolutely be the priority and emphasis of all business schools in Ghana and on the continent.

Most youth in fact require wage employment as their first entry into the labour market, and studies have shown that about 80% of new jobs are created by existing businesses. Therefore, the caliber of business leaders we train will determine the quality and quantity of jobs we create going forward. And the Accra business school in its ten years of existence has trained over 18000 people, most of whom are high caliber business leaders catalyzing the job creation process.


In summary food sovereignty, energy sovereignty and value-added manufacturing together with high-quality skills training will form the basis of our economic transformation that will not just focus on macro stability but micro inclusivity, a transformation premised not on superficial economic growth but growth with DEPTH, a growth characterised by: Diversification in production and exports, Export Competitiveness, Productivity Increases, Technological Upgrades & Human Well-being. (ACET)


These will provide a basis for structural transformation and stop our dependence on the IMF for economic succour every half decade.

I thank you.

Bernard Avle

Host, Citi Breakfast Show (Citi FM) and the Point of View (Citi TV)


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