Former President John Dramani Mahama has recounted the factors that forced his National Democratic Congress administration to resort to the International Monetary Fund (IMF) for financial assistance in 2015.
According to Mahama, the implementation of the Single Spine Salary Structure ballooned the government’s wage bill to 73% of revenue, which left very little left for other projects and forced the government to seek help.
Mahama made the revelations during his recent interview with the Voice of America (VOA)’s Straight Talk Africa.
The former President admitted that there were also some external factors that also impacted his administration.
“We are all members of the IMF. It is a body we go to when you have some macroeconomic instability and so at the time I was president, yes we suffered macroeconomic instability due to two factors: Internal and external.
“External…you will get shocked from time to time. We had the commodity price shocks; the slowdown in China. But internally, we overshot our expenditures because we introduced a new wage policy that sought to make the remuneration in the public sector more uniform and it shot the wage bill far above what we had anticipated. Almost 73% of our revenues was going to pay wages and salaries alone and so that forced us to go into the IMF,” Mahama told Hayde Adam in the interview aired on October 12.
Mahama, however, pinned the NPP returning to the IMF on needless excessive borrowing as opposed to him being forced due to a bloated wage bill.
“The economy is situated in an environment. It does not exist in isolation and so there are some things that need to be done to create an environment for the economy to thrive. Some of them are governance issues, strengthening state-owned institutions, the fight against corruption and so many other things that create the environment for the economy to thrive.
“I think that when we go into this programme and we bring debts back to sustainable levels and we are able to get the bridging facility in order to achieve policy credibility so that investors again feel confident that they can bring back their money into Ghana, then we must start from there and maintain that prudence,” he said.
He added that this should be the last time Ghana as a nation resorts to the IMF.
“This should be the last time we go to the IMF because going and coming, it creates a certain instability in the whole system and it also reduces the faith that people have in our democracy,” Mahama said.
Ghana initiated contact with the IMF in July after the economy experienced a downturn. The move was occasioned by downgrades of the economy by rating agencies such as Fitch, Standard and Poor and Moody’s which prevented the country from accessing the international capital market.
Source: theGhanaianVoice.Com