Hailing Ghana as one of sub-Saharan Africa’s success stories, the International Monetary Fund (IMF) reported that its bailout programme has helped restored the country to a rising star in Africa.
In its latest analysis of the Ghanaian economy, IMF indicted former leader for grossly mismanaging the Ghanaian economy.
“It (Ghana) was the first to free itself from colonial rule, in 1957. It built a stable democracy in the 1990s, overcoming decades of political upheaval.
“A thriving economy fueled by exports of cocoa, gold, and—more recently—oil helped cut the poverty rate from 53 percent in 1991 to 21 percent in 2012.”
“But by 2015, IMF bemoaned, Ghana’s economy was in trouble, hobbled by widening current account and budget deficits, rampant inflation, and a depreciating currency.
“Credit dried up as interest rates rose and banks’ bad loans piled up. At the root of Ghana’s woes was out-of-control government spending, largely to pay salaries of an overgrown civil service.
“An asset quality review revealed significant under-capitalization. Some banks were recapitalized, and the Bank of Ghana used its newly enhanced authority to wind down insolvent lenders.
“The central bank developed regulations to ensure that banks meet sound underwriting and credit evaluation standards. It also paid back insolvent microfinance institutions’ depositors.”
In early 2015, Ghana turned to the IMF for a $918 million loan to help stabilize the economy.
IMF advisors, working with the Ghanaian government, developed a three-part program which included: restore debt sustainability, strengthen monetary policy, cleanup the banking system.