Ghana's unions and left reject bailout talks with the IMF as economic crisis spirals – The Real News Network

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This story initially appeared in Peoples Dispatch on July 20, 2022. It’s shared right here with permission below a Inventive Commons license.
The federal government of Ghana has initiated talks with the Worldwide Financial Fund (IMF) for a possible bailout program. A delegation of the IMF concluded a week-long go to to Accra on July 13 and met with officers together with Finance Minister Ken Ofori-Atta and Vice President Dr. Mahamudu Bawumia. The proposal has been severely criticized by the Ghanaian left, particularly the Socialist Motion of Ghana (SMG), and commerce unions.
“The IMF is not here to bring down prices, they are not here to ensure that we construct roads – it is not their business and they simply don’t care. … The IMF’s primary concern is to make sure that we build the capacity to pay our loans, not to develop.”
In an announcement launched after the go to, IMF Mission Chief Carlo Sdralevich stated, “The IMF team held initial discussions on a comprehensive reform package to restore macroeconomic stability and anchor debt sustainability… The discussions focused on improving fiscal balances in a sustainable way while protecting the vulnerable and poor; ensuring credibility of the monetary policy and exchange rate regimes; preserving financial sector stability; and designing reforms to enhance growth, create jobs, and strengthen governance.”
The IMF has stated that it’ll proceed to interact with the Ghanaian authorities on the formulation of an Enhanced Home Program that might be supported by an IMF association. In line with reports, negotiations may lead to Ghana being eligible for as much as USD 3 billion below the Prolonged Credit score Facility and Prolonged Fund Facility. The programme may lengthen over three years, the help being conditional on the federal government assembly sure financial and coverage targets. 
Talks have been held simply days after Ghana witnessed one other spherical of protests in opposition to the spiraling financial disaster. The motion was organized by Arise Ghana, which identifies itself as a stress group, on the finish of June to protest the “persistence and astronomical hikes in fuel prices by the Akufo-Addo/Bawumia government”, the “grabbing of State lands” by authorities officers, “increased rate of police brutalities and state-sponsored killing of innocent Ghanaians”, and the introduction of a 1.5% tax levied on all digital transactions.
Protestors additionally demanded a full, bi-partisan parliamentary probe into COVID-19 expenditures and the cancellation of the controversial Agyapa Royalties Deal
Official figures present that the inflation charge in Ghana hit 29.8% in June, the best since 2004. The worth of meals has shot up by 30.7% over the previous yr, with inflation of 59.3% within the value of vegetable oil and 65% in wheat flour. Housing, which incorporates electrical energy, water and fuel, has registered an inflation of 38.4% and commuters are paying over 40% extra for transport, with an inflation of 99.7% in diesel costs and 69.4% for petrol. 
The nation’s foreign money, the cedi, has misplaced 23.5% of its worth in opposition to the greenback for the reason that begin of 2022. Talking on July 8, President Nana Akufo-Addo said that the federal government had sought the collaboration with the IMF “to repair, in the short run, our finances which have taken a severe hit…while we continue to work on the medium to long term structural changes that are at the heart of our goal to create the Ghana beyond aid, that is building a resilient, robust, Ghanian economy.” 
The federal government’s transfer has been strongly opposed by the Socialist Motion of Ghana (SMG). A press release by the motion learn, “The crisis the Ghanaian economy has been plunged into is only a symptom of the collapse of the neoliberal order which has been diligently enforced by the IMF, the World Bank, the centers of power in the colonial metropolis and neo-colonial regime spread across Africa, Asia, South America, and elsewhere.
“The enforcers of this order have insisted over the last 30 years or more that the path to economic recovery lies in the unbridled and doctrinaire privatization of state enterprises, the withdrawal of subsidies on social services, reckless devaluation of national currencies, and the massive retrenchment of labor in the public sector.” 
The motion said that Ghana is at present spending 128% of its whole nationwide income on public sector emoluments and debt servicing. The nation’s debt-to-GDP ratio is reportedly at a stunning 97%. 
In line with the SMG [Socialist Movement of Ghana], meals costs have skyrocketed by greater than 400% previously two years. The actual worth of wages and salaries is reported to be solely round 40% of what it was six years in the past.
In the meantime, in accordance with the SMG, meals costs have skyrocketed by greater than 400% previously two years. The actual worth of wages and salaries is reported to be solely round 40% of what it was six years in the past. Younger persons are significantly susceptible to the disaster as they type 36% of the nation’s inhabitants. By the top of 2021, younger folks fashioned roughly three-quarters of unemployed adults in Ghana. 
The SMG has rejected the federal government’s claims that the present state of affairs has arisen out of exterior elements just like the COVID-19 pandemic and the Russia-Ukraine battle. The motion has identified that the whole COVID-19-related expenditure, as confirmed by the Finance Minister, was lower than GH₵25 billion out of greater than GH₵200 billion. The Nation Director of the World Financial institution in Africa had said final month that whereas “COVID did not help”, the indicators of a crumbling economic system had been seen lengthy earlier than the pandemic. The SMG additionally argued that the impression of the Russia-Ukraine battle on Ghana’s economic system had not been that profound.
The impression of the disaster can also be manifest within the wave of labor unrest within the nation. The Ghana Nationwide Affiliation of Academics (GNAT), Nationwide Affiliation of Graduate Academics (NAGRAT), Academics and Academic Employees Union of the Commerce Union Congress (TUC), and the Involved Academics Affiliation of Ghana went on strike on July 4. They have been demanding that the federal government pay a Price-of-Dwelling Allowance (COLA) amounting to twenty% of their fundamental wage. 
The work stoppages have been on the verge of spilling over to different sectors together with well being, the place the Union of Skilled Nurses and Midwives, Ghana Medical Affiliation, Ghana Registered Nurses and Midwives, Well being Providers Employees’ Union and others had introduced strikes. Over 27,000 staff within the public sector have been additionally set to walkout because the Public Providers Employees Union introduced an industrial motion on July 19.
Again in 2021, the Ghanaian authorities had reached a compromise with the TUC for a 4% enhance within the base pay in 2021, and seven% in 2022. Nevertheless, this was conditional on the federal government sustaining the speed of inflation under 8%. The federal government had additionally agreed to not declare redundancies within the public companies and to proceed to make use of younger folks within the public service. 
Nevertheless, at first of 2022, official figures confirmed that inflation had hit 27% and the costs of products and companies had tripled, according to Public Providers Employees Union chief Ken Tweneboah Kodua. “Anyone earning an income in this country could tell you that their current pay could not buy two-thirds of a basic goods basket, that is a wage loss,” he stated. 
After the federal government refused to interact with the employees and reply to their calls for, the unions started organizing for industrial motion to demand a 20% COLA. Although the rise itself wouldn’t have been sufficient, it might no less than be a gesture, argued Kodua, to offer a cushion for the employees. On July 12, the Finance Minister reportedly advised organized labor that he would solely meet with unions that weren’t on strike. All unions walked out in solidarity. 
After some unions had been on strike for over per week, the federal government lastly agreed on July 15 to offer a 15% COLA allowance to all public sector staff efficient from July 1. 
Nevertheless, the wrestle might not be over but. The College Academics Affiliation of Ghana (UTAG) has already declared that it’ll “not tolerate any IMF conditionality that negatively impacts the existing agreements between the Government and the Association to improve the conditions of service” of its members. 
The TUC has additionally condemned the federal government’s choice to strategy the IMF as a “tragic mistake and a sad one for Ghana.”  A press release by Secretary Common Dr. Yaw Baah asserted that handing over the administration of the economic system to the IMF was not the answer: “These IMF programs 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…”
 “The IMF has ruled us for some decades now, history will tell you that in all the programs they have had, those who have tended to suffer the most are not only the workers but the potential workers. The IMF doesn’t come for the workers…their policies are anti-worker…all their programs tend to decrease the real income of the employees and tend to cut down the compensation for public service– its as if they just don’t care about the public worker- this worker who is the engine of the government, you tend to hold or slash his income,” said Kodua.
The most recent spherical of talks is no less than the seventeenth time that the West African nation has approached the IMF. The primary time was after Ghana’s first Prime Minister and President – socialist and Pan-Africanist revolutionary chief Dr. Kwame Nkrumah – was overthrown in a CIA-sponsored coup in 1966. 
By 1971, the Ghanaian cedi was devalued by 44%. The subsequent few years witnessed main political and financial crises and instability, together with two army coups in 1972 and 1979. By the early Nineteen Eighties, the state of affairs in Ghana had change into dire, with inflation hovering to 123% and a widespread famine brought on by extended drought and bushfires. 
In 1983, below the management of Flt. Lt. Jerry Rawlings, the Provisional Nationwide Protection Council (PNDC) applied a structural adjustment and financial restoration program sponsored by the IMF and the World Financial institution. This paved the way in which for neoliberal reforms together with the liberalization of costs, privatization, and monetary and public sector restructuring. 
“Access to healthcare became largely dependent on how deep your pocket was,” said Kwesi Pratt Junior, Common Secretary of the SMG [Socialist Movement of Ghana].
Within the span of 1 yr, 300,000 public sector staff misplaced their jobs. In the meantime, the workforce on the Ghana Cocoa Board (Cocobod) was slashed from 100,000 to 10,000, in accordance with Kodua. Subsequently, subsidies have been faraway from social companies together with well being, and a Money and Carry system was put in place which required folks to pay beforehand when in search of care at amenities: “access to healthcare became largely dependent on how deep your pocket was,” said Kwesi Pratt Junior, Common Secretary of the SMG. 
“One of the conditions they [the IMF] gave us was that we should sell state enterprises, they told us that these enterprises are wasteful. Of the 400 factories that Nkrumah built, by 1992, we had sold more than 300. Out of all the enterprises and factories that we sold, only two appear to be working now. The others simply collapsed,” he added. 
The IMF additionally pushed for Ghana to devalue its foreign money. In line with Pratt, cumulatively between 1982 and now, the Ghanaian cedi has been devalued by 38,000%. 
Ghana would proceed to strategy the IMF over the next many years.The latest program was a part of a three-year Prolonged Credit score Facility association signed with the IMF in 2015 below former President John Mahama. In trade for a mortgage of USD 918 million, the federal government imposed reforms together with cuts on power subsidies, a 17% hike in gasoline costs, and a freeze on jobs within the public sector. The nominal enhance within the whole wage invoice was additionally restrained to 10%. 
Ghana exited the IMF program in 2019 (after it was prolonged by one yr), this time below the administration of President Akufo-Addo and his right-wing New Patriotic Occasion. 
“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,” argued the TUC.
Regardless of being one of many world’s largest exporters of gold, a report by the Financial institution of Ghana discovered that less than 1.7% of the returns from gold made it again to the federal government. Between 1990 and 2002, the federal government obtained solely USD 87.3 million from the USD 5.2 billion value of gold produced. 
As the federal government prepares to take the subsequent steps, the SMG has said that its expectations from the method are “not optimistic”, arguing that there’s “no evidence that any country, anywhere in the world, has managed to improve its economic fortunes as a result of the implementation of measures under the marching orders of the Bretton Woods Institutions.” 
“The current crisis in the neo-colonies after 30 years of the rigorous implementation of the Economic Recovery and Structural Adjustment Programmes is the clearest indication that these measures have failed to address the crippling conditions imposed on working people,” SMG stated. There are considerations {that a} new settlement will result in additional austerity measures, provided that the IMF has already pushed fiscal consolidation for Ghana as a part of its COVID-19 restoration technique. 
“One thing is very certain,” argues the TUC, “the eighteenth IMF program will not solve our problems. Therefore, we should be prepared for the nineteenth, twentieth and more programm in the next few years, even though it is so obvious that IMF programm pay practically no attention to the removal of structural constraints to sustainable growth and development.” The TUC has known as for insurance policies and packages geared toward ending the domination of overseas corporations in the best sectors of the economic system, minimizing dependence on pure assets, and constructing a strong manufacturing base. 
“The IMF is not here to bring down prices, they are not here to ensure that we construct roads– it is not their business and they simply don’t care. They are not here to ensure that we expand access to social services like education and healthcare… The IMF’s primary concern is to make sure that we build the capacity to pay our loans, not to develop,” Pratt said. 
The SMG has argued that eradicating Ghana from its present state of dependence will solely be attainable by means of a elementary restructuring of the economic system, hinged on socialist transformation. “We need to focus on building an economy in which the resources of Ghana are owned by its people and are exploited for their own benefit.” The group has argued that referring to Dr. Nkrumah’s mannequin of growth based mostly on huge industrialization may change into a key issue. 
Below the present situations, Pratt argued that “the government must listen to organized labor, and begin to build a national consensus so we avoid the calamity which is looming on the horizon.”
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