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On July 1, 2022, the Minister for Information released an official statement to inform Ghanaians that President Akufo-Addo has directed the Minister for Finance to commence formal engagements with the International Monetary Fund (IMF), “inviting the Fund to support an economic program put together by the Government of Ghana”. The statement further underlined Cabinet’s endorsement of the decision by the President to seek IMF support.
The Trades Union Congress (TUC) considers this decision by government a tragic mistake and a sad one for Ghana. This will be the eighteenth time our country’s economy will be handed over to the IMF to manage. It is very sad because it is a clear indication that we cannot manage our own affairs.
We fully acknowledge the impact of global developments on Ghana’s economy. At the same time, the current state of the economy suggests that the robust economy government claimed to have built before the pandemic was not resilient enough. It must have been built on a “foundation of straw” but Ghanaians were told that our economy was strong and stable.
It is now very obvious that the economy of Ghana is in a desperate situation. But we are of the firm view that handing over the management of the economy to the IMF is not the solution to our problems. In the Fourth Republic alone, we have implemented five IMF programmes. These IMF programmes have only imposed unnecessary hardships on Ghanaians with practically nothing to show for them. The solutions proffered by the Fund are not appropriate for our economy. They scratch the edges of the problem without tackling the fundamental issues facing the economy.
The negative social implications of the religious manner in which IMF-sponsored programmes were implemented during the structural adjustment period are still very fresh in our memories. Tens of thousands of public sector workers lost their jobs, unnecessarily. For example, the last IMF-Extended Credit Facility programme (2015-2018) was conditioned on government freezing employment in the public service, among other conditionalities. This meant that while CHIP Compounds were without skilled medical personnel, trained nurses were picketing at the Ministry of Health and Ministry of Employment and Labour Relations for jobs. That IMF programme produced an association of unemployed graduates for the first time in the history of our country. The programme also led to a steep decline in real wages. The hardships all these IMF programmes brought on Ghanaians were enormous and needless. What we got in return was an economy still overly dependent on production and export of raw materials and import of manufactured products. Most of our productive sectors such as mining, petroleum and telecommunications are still being controlled by foreign companies.
Our history of engagements with the IMF provides ample evidence that IMF-sponsored programmes and policies cannot change our economic circumstances. If we learn from history, we would know that countries that have succeeded economically such as South Korea, Singapore and China did not follow the neo-liberal policies based on the Washington Consensus which provide the basis for all IMF-sponsored programme.
The only reason a government would want to seek IMF bailout is to look for short-term quick fix to our perennial economic challenges. Ghana has done this seventeen times and government has just announced the commencement of engagements for the eighteenth IMF-sponsored programme. One thing is very certain – the eighteenth IMF programme will not solve our problems. Therefore, we should be prepared for the nineteenth, twentieth and more programmes in the next few years, even though it is so obvious that IMF programmes pay practically no attention to the removal of structural constraints to sustainable growth and development.
What we need now are measures that tackle the structural constraints to economic and social development. Those measures must include policies and programmes aimed at ending the domination of foreign companies in the most productive sectors of the economy, minimise our dependence on natural resources and build a robust manufacturing base. An economy which is dependent on few natural resources will continue to face fiscal challenges.
We believe strongly that we can achieve sustainable economic growth and development if we build consensus among the key stakeholders through a genuine social partnership.
In 2019, the Government of Ghana, represented by the Ministry of Finance and Ministry of Employment and Labour Relations and Organised Labour represented by the Trades Union Congress (TUC) and private sector employers represented by the Ghana Employers’ Association (GEA), collectively referred to as Social Partners, signed a Memorandum of Understanding (MoU) with the following objectives:
- Provide a mechanism for building a sense of cohesion, trust, self-management, and engage in frank and open discussions with mutual sacrifices and contributions from all stakeholders to champion the course of Ghana’s development;
- Provide a platform for reaching national consensus on transformation and development issues;
- Provide a post-IMF Extended Credit Facility local development partnership arrangement among Social Partners to ensure the irreversibility of macroeconomic gains;
- Undertake analysis on key development issues and advise government on same;
- Deliberate and make inputs on national development policy discourse, including the National Budget;
- Serve as an internal mechanism to foster accountability; and
- Inculcate a culture of social cooperation between workers, employers and government at all levels of the Ghanaian society.
Our understanding of the unilateral decision by Government to commence engagements with IMF, without any consultation with the social partners, amounts to a declaration of the end of the social partnership initiated in 2019 with the above-mentioned objectives.
We would like to remind government that, as part of the negotiations for the 2021 and 2022 base pay, we agreed to the four and seven percent pay increases respectively on condition that government will not declare redundancies in the public service and that government will continue to employ young people into the public service.
We would like government to note that the working people of Ghana will do whatever it takes to prevent the imposition of needless hardships on them and the good people of Ghana.
[SIGNED]
DR. YAW BAAH
SECRETARY GENERAL
ACCRA, 3RD JULY 2022
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