Sign in
Download Opera News App

 

 

Ghana is now in a big bankruptcy season due to thier presidency’s policy

Ghana has been hailed as one of sub-Saharan Africa’s success stories. It 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, 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.


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:

  • Restore debt sustainability. The government limited hiring and wage increases and eliminated subsidies for utilities and petroleum products. To raise revenue, it cracked down on tax evasion and rationalized exemptions. New revenue sources included a tax on luxury cars and increased taxes on high earners. To put Ghana’s finances on a sounder footing, the new Public Financial Management Act called for improved accounting standards, procedures, and technology.
  • Strengthen monetary policy. The authorities agreed to gradually end central bank financing of the budget deficit—a major source of inflation—and to fortify the inflation-targeting regime.

Content created and supplied by: Youngkwesi (via Opera News )

Africa Ghana sub-Saharan

COMMENTS

Load app to read more comments