IMF Want Ghana To Solve A Difficult Formula. Ken Ofori-Attah Disclosed

IMF Want Ghana To Solve A Difficult Formula. Ken Ofori-Attah Disclosed

Highlights

1. What the IMF wants is ultimately a very difficult formula or equation, according to Ken Ofori-Attah.

2. Get to know the one question that the whole Economic Management Team must solve that is classified as difficult by the finance minister. Imagine if there were about 170 questions for one person to answer.

3. Find out the formula or equation that the IMF wants Ghana’s Economic Management Team to solve.

The International Monetary Fund (IMF) recently visited the country, Ghana, to vet the books of the country upon a request from the Ghanaian government for a bail out program from the fund.

The fund, having observed the books of the country, kept people wondering the real determinant that would facilitate the bail-out program to kick start.

In a revelation by the finance minister, Ken Ofori-Attah, during an interview with Joynews, the finance minister said what the IMF wants is a difficult formula or equation that the fund wants the country to solve, which is, a positive primary balance. Ken Ofori-Attah emphasized that the International Monetary Fund wants the country’s primary balance to return to positive.

What then is a primary balance?

A “primary balance is the difference between a government’s revenues and its non-interest expenditures; it is the most accurate reflection of government fiscal policy decisions. A country with a primary deficit, for example, spends more on roads, schools, defense, than it takes in from taxes and other revenues”, according to the imf.org

In simple terms, apart from interest to be paid on loans, the revenue generated by the country should cater for everything, without taking loans. The rationale behind this kind of request is to prevent the country from taking loans to pay salaries.

To put everything in perspective, wages and salaries already take about fifty percent (50%) of government revenues, while interest payment takes about fifty-five percent (55%) of government revenues. Therefore, with wages and salaries already taking 55%, all other expenditures like road construction, hospitals and schools building, goverment flagship programs like free Senior High School etc. and all other goverment functions must take up the remaining 50%

The question then is, will the government have the breathing space to increase salaries or even recruit new workers, which will increase the already 50% portion and decrease the financing space for other government activities?

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