EXPLAINER: A chronology of Ghana's engagements with the IMF

The words International Monetary Fund have been three buzzwords in Ghana in the past few weeks. The International Monetary Fund (IMF) became the major talking point after the Akufo Addo-led Government of Ghana, on Wednesday, July 1, 2022, announced its intention to seek a bailout from the Bretton Wood institution, following the much-touted government-engineered “Ghana Beyond Aid” slogan.

Shortly after the announcement, there has been a controversy about whether the government was justified in going for a bail-out. Even the number of times Ghana has gone to the IMF has also been a subject of debate. Instead of the 17th time, some news reports have suggested that Ghana was going to the IMF for the 18th.

Therefore, DUBAWA decided to do an in-depth report on Ghana’s entanglement with the IMF over the last couple of decades.

What is the IMF?

The IMF is a global network of 190 countries, which have come together to build a framework for international economic cooperation. Among other things, the Fund provides loans to its member countries experiencing or having the potential to experience balance of payment problems.

Ghana’s announcement of intention to apply for an IMF bailout was preceded by a series of demonstrations over the free fall of the Ghana cedi, relative to the major trading currencies; high and increasing cost of fuel and its attendant high cost of living; high and rising rate of unemployment, culminating in low standard of living; alleged misappropriation of public funds; and claims of poor economic management.

Since the July 1 announcement, representatives from the Fund, led by its mission chief, Carlo Sdralevich, have arrived in the country and begun talks with the Ghana government in order to satisfy themselves with Ghana’s ability to commit to financial obligations and to determine the kind and form of support the country would qualify for. If successful, this will not be the first time Ghana would benefit from the Fund–but the 17th time.

Under seven different heads of state/president, and dating back from 1966, Ghana has already entered into 16 separate but similar forms of loan arrangements with the Fund, particularly Stand-By Arrangements (SBAs) and Extended Credit Facility (ECF).

This means that statistically, the country seeks a bailout from the Fund every three and one-half years.

The following are the specific years Ghana has reached out for IMF bailouts and the leaders under whom these arrangements occured: 1966, 1967, and 1968 under Joseph Arthur Ankrah (head of state); 1969 under Akwasi Amankwa Afrifa (head of state); 1979 under Frederick William Kwasi Akuffo (head of state); 1983, 1984, 1986, 1987, 1987, and 1988 under Jerry John Rawlings (head of state); 1995 and 1999 under Jerry John Rawlings (president); 2003 under John Agyekum Kufuor (president); 2009 under John Evans Atta Mills (president); and 2015 under John Dramani Mahama (president).

Below are the details:

IMF under Joseph Ankrah (1966, 1967, 1968)

Ghana first reached out for IMF support on May 17, 1966, a couple of months after the National Liberation Council (NLC), led by Major Joseph Arthur Ankrah toppled Nkrumah’s government in a military coup d’etat.

Even though he considered the prospect, Nkrumah never took Ghana to the IMF, contrary to claims by proponents of the present administration. After Nkrumah’s overthrow, however, the new military regime invited the IMF together with the World Bank to come and help it to effectively manage its economy. The Ankrah-led government went into a Stand-By Arrangement with the Fund.

According to the terms of the agreement and under the direction and supervision of the Fund, thus, Ghana privatised a number of state-owned corporations that were deemed unprofitable.

The programme, which came with a 36,400 dollar injection, ended on May 16, 1967 but was renewed effective May 25, 1967 up until May 24, 1968 with an amount of 25, 000 dollars. Again on May 28, 1968 till May 27, 1969, Ghana again benefitted from the IMF with an amount worth 12, 000 dollars, injected into the economy. It was the last arrangement Ankrah went into with the IMF, but the deal would outlive his reign: he had resigned on April 2, 1969.

IMF under Akwasi Afrifa (1969)

Major Akwasi Amankwa Afrifa took over the reins of the NLC-led government on April 2, 1969, after Major Ankrah’s forced resignation, following a bribery allegation against him.

Two days after the expiration of the last Ankrah-initiated IMF programme on May 27, 1969, Afrifa renewed it for a-5,000-dollar support on May 29, 1969, and agreed to run for a year.

It expired on May 28, 1970, but he would not be at the helm of affairs to witness the end of what he had started. Afrifa, on October 1, 1969, handed over to a democratically elected Progress Party government, led by Kofi Abrefa Busia as prime minister and, later on August 31 1970, joined by Edward Akufo Addo as ceremonial president, both of whose reign ended abruptly on January 13, 1972, after a military coup d’etat by the Supreme Military Council (I), led by Lt. Col. Ignatius Kutu Acheampong. In both regimes, Ghana did not go to the IMF.

Indeed, Acheampong opted for local solutions to Ghana’s problems and thus was in the process of instituting a number of home-grown programmes.

A couple of weeks into his government, which had begun on January 13, 1972, Acheampong was instituting a domestication agenda, which, for example, birthed the popular local agricultural policy, “Operation Feed Yourself,” when, Akuffo, who hitherto was his deputy, toppled his government on July 5, 1978 to form the new Supreme Military Council (II) government.

IMF under Will Kwasi Akuffo (1979)

Nearly 10 years after exiting the first IMF programme on May 28, 1970, Ghana, under Lt Gen. Frederick William Kwasi Akuffo, who had been head of state for six months, ran back to the Fund on January 10, 1979.

This was largely because the agricultural and other home-grown programmes instituted by Lt Col Ignatius Kutu Acheampong did not fare well and was reported to have worsened Ghana’s economic woes: corruption and economic mismanagement were still implicated.

Thus, prices of commodities such as soap and cloth, mainly imported, were increasing at astronomical levels. Indeed, inflation was said to have been so high that even toilet paper was worth more than gold. Akuffo did not only depose his boss; he also opposed his predecessor’s local policies, hence he took Ghana back again to the IMF for a one-year Stand-By Arrangements support of 53,000 dollars, spanning January 10, 1979 to January 9, 1980.

As nature would have it, Gen. Akuffo’s reign was also short-lived; thus, it did not last to witness the expiration of the IMF programme on January 9, 1980. He had been overthrown on June 4, 1979 by a group of 15 junior officers, known as the Armed Forces Revolutionary Council (AFRC), led by Flt. Lt Jerry John Rawlings, after a botched attempt a couple of weeks earlier on May 15.

IMF under JJ Rawlings (1983, 1984, 1986, 1987, 1987, 1988, 1995, 1999)

Though he handed power to a civilian government after his first coup of June 4, 1979, Jerry John Rawlings, on the wings of his Provisional National Defence Council (PNDC), staged a comeback coup on December 31, 1981, two-and-a-half years after the first.

The economic downturn the country experienced earlier was still lingering and had even been exacerbated by the ravages of climate change, causing an intense food shortage and hunger crisis. Although the country was then living off food donations from global charities, the new-Rawlings regime did not immediately go to the IMF in 1982.

It, however, did so for 238, 500 dollars on August 3, 1983 when the country recorded its harshest economic crisis even in contemporary history. When it ended on August 2, 1984, this arrangement was renewed multiple times: from August 27, 1984 to December 31, 1985 for a Stand-By Arrangement of 180,000 dollars; from October 15, 1986 to October 14, 1987 for a Stand-By Arrangement of 81,000 dollars; from November 6, 1987 to November 9, 1988 for an Extended Fund Facility of 245, 400 and for a Structural Adjustment Facility of 129,858, running concurrently; and from November 9, 1988 to March 5, 1992 for an Extended Credit Facility of 338,550.

Under the new-IMF’s (SAP), the status quo of the state-controlled economy was abandoned to give way for a market-oriented economy to take over. This paradigm shift resulted in the stabilisation of the economy, very significantly reducing inflation from 142 percent at the start of the IMF programme in 1983 to 10 percent by the end of 1991.

Ghana did not wean itself from support from the Bretton Wood institution with its transition from military rule to a republican country for the 4th time, following its first general election in 1992.

Neither did it change its leader who transitioned from being a military head of state to a democratically elected president, having won the 1992 election with his then newly formed National Democratically Congress (NDC) political party.

With Rawlings still at the helm of affairs, Ghana went back to the IMF again for an Extended Credit Facility of 164,000 dollars from June 30, 1995 to May 2, 1999, which facility was again renewed at the value of 228,800 dollars for another three years, effective May 3, 1999 through to November 30, 2002, almost two years into the reign of John Agyekum Kufuor.

IMF under J.A Kufuor (2003)

As the second president of the fourth republic, John Agyekum Kufuor of New Patriotic Party took over from Jerry Rawlings on January 7, 2001. Though Ghana was still under IMF for almost the entire first two years of his reign, he did not oversee that arrangement: it was a legacy he had inherited from his predecessor, which arrangement elapsed in November 30, 2002.

However, six months after shepherding Ghana out of the IMF programme, the Kufuor administration started another Extended Credit Facility on May 9, 2003, which spanned through to October 31, 2006 and was worth 184,500 dollars.

The only unique thing was that Ghana had gone into the new arrangement as a highly indebted poor country (HIPC) for debt cancellation, a programme that the IMF had initiated in the mid-1990s, which aimed to bring debt relief to self-acclaimed very poor countries. By 2006, and under this new agreement, Ghana had reduced his debt stock from 66 billion to 23 billion dollars.

Under the direction of the IMF, Ghana injected the money it otherwise would have used to repay the Fund, into such sectors of the economy as education, health, and policies aimed at ensuring good governance and accountability.

Thus, these policies brought some development to the country and some relief to the citizenry by its expiration on October 31, 2006 before John Kufuor would hand over power to John Mills on January 7, 2009.

IMF under Atta Mills (2009)

Six months after he took over the helm of affairs at the presidency with NDC, John Evans Atta Mills, on July 15, 2009 supervised Ghana’s return to the IMF for a 387,450-dollar Extended Credit Facility scheduled to end on July 23, 2012.

IMF under John Mahama (2015)

After serving the remnant of the tenure of his former boss for five months as caretaker president from July 24, 2012 to January 6, 2013, John Dramani Mahama became the fourth elected president of the fourth republican Ghana from January 7, 2013 to January 6, 2017.

Not only is Mahama the only president to serve only one term, as far as the fourth republic is concerned; he is also the president who took the longest time to enter into another IMF programme at the elapse of the previous one initiated by his predecessor, as far as the history of the fourth republican Ghana’s relationship with the IMF is concerned. Mahama’s four-year presidency was characterised by protracted power outages, nicknamed in local parlance as ‘dumsor’.

This development plunged the country into serious economic challenges, necessitating a return to the IMF for a four-year-long Extended Credit Facility of 918 million dollars to support job creation, stabilise the struggling cedi, revive the ailing economy, and facilitate fast growth while also protecting social spending. This arrangement spanned from April 3, 2015 to April 2, 2019 for an Extended Credit Facility worth 664,200 dollars.

John Mahama would later lose the next presidential election on December 7, 2016 to his closest and second-time contender, Nana Addo Danquah Akufo Addo.

The table below shows the summary of Ghana’s IMF lending history, sourced from the website of the IMF:

IMF under Nana Akufo-Addo (Expected 2023)

After forming the fifth government of the fourth republican Ghana, the Akufo-Addo-led administration could not wait to get out of the existing IMF programme, which he had inherited from his predecessor.

Its finance minister, Ken Ofori-Atta, led the government not only to exit the IMF programme but also to throw a kenkey party to, inter alia, celebrate the exit in 2019. The impression was that the present government was never going into an IMF programme for any programme whatsoever.

Indeed, Ken Ofori Atta, the finance minister; John Kumah, one of his deputies; Kwaku Kwarteng, chair of the parliamentary select committee on finance; a host of other highly placed government officials; and even the president himself literally swore the NPP-formed government would not have anything to do with the Bretton Wood entity.

In spite of all of the opposition, the president is reported to have called the Fund’s country representative on Friday, July 1 to announce his government’s intention and readiness to talk to the Fund for support. The justification since the announcement has unsurprisingly been the rippling effect of the COVID-19 pandemic and Russia-Ukraine war.