Prof. Bokpin: Extending IMF Programme for Three More Years Should Be the Next President’s Priority

As Ghana’s elections approach this weekend, Professor Godfred Alufar Bokpin, an expert in Economics and Finance, has stressed that the next administration must prioritize extending the country’s International Monetary Fund (IMF) program for another three years, until 2029. This extension, he argues, would provide the necessary “policy anchor” for the country’s economy, ensuring long-term stability and continued funding after the current IMF program ends.
The government entered into a three-year, $3 billion extended credit facility with the IMF in 2022, which is set to expire in 2025. This agreement includes an option for a one-year extension to 2026. However, Prof. Bokpin believes that the incoming government, which will take office on January 7, should pursue an additional three-year extension, taking the program through to 2029.
According to Prof. Bokpin, one of the main reasons for extending the program is the lack of credibility Ghana would face in accessing long-term capital on international markets immediately after the current program concludes. The country’s recent history of defaulting on its debt means that returning to the international bond market in 2026 would likely result in high costs and limited access to funding. Prof. Bokpin explains, “The headwinds facing the economy are still strong. We have also not built enough credibility after defaulting on our debts, so going back to the international market will be costly.”
The government has recently stated its intention to return to the international market for funding, three years after the debt restructuring process. The last time Ghana issued a bond was in September 2022, after which it launched a domestic debt exchange program in January 2023. This initiative, completed in September 2023, allowed the government to swap over GH₵83 billion worth of local bonds for 12 new ones with reduced interest rates and longer tenors. Additionally, Ghana reached an agreement with its official bilateral creditor committee to restructure commercial debts worth $14 billion, $13 billion of which is in Eurobonds.
Prof. Bokpin emphasizes the importance of signaling a long-term partnership with the IMF, which would bring the stability necessary for long-term economic funding. An extended program would not only enhance the country’s credibility but also provide the policy support needed to navigate future economic challenges. He points out that Ghana’s early exit from the 2016-2019 IMF program exacerbated some of the country’s current financial difficulties.
Further, Prof. Bokpin advocates for a strategic and well-timed approach to accessing international bond markets. He stresses the importance of considering Ghana’s current economic conditions and aligning any bond issuance with the country’s long-term economic goals. He adds, “A long-term partnership with the IMF that brings along stability will signal to investors that the country is ready for long-term investments and capital.”
The economist also highlighted the long-term nature of Ghana’s economic transformation, which he believes will take up to 15 years. To achieve this, he stresses the need for patient capital at affordable rates, particularly for infrastructure development. Prof. Bokpin encourages the government to focus on economic infrastructure projects that can generate returns, rather than social infrastructure that may not be self-sustaining. He advocates for public-private partnerships to ensure these projects are financially viable and reduce the burden of public spending on large infrastructure projects.
Looking ahead to the election results, Prof. Bokpin expressed concerns that both of Ghana’s major political parties have outlined policies without considering the financial constraints imposed by the IMF’s current extended program. These policies, he argues, have not been properly costed and may clash with the fiscal discipline required by the IMF agreement, which includes strict expenditure cuts and revenue optimization. Prof. Bokpin warns that the new government may be forced to make difficult decisions that lead to increased spending and reduced revenue if the party manifestos are not aligned with the realities of the IMF program.
He also noted that both political parties have proposed tax cuts and increased capital expenditure, which could violate the terms of the IMF program. However, he suggests that these goals could be achieved through improved government efficiency. A critical point, according to Prof. Bokpin, is the agreement from both parties to drastically reduce the number of ministers, which would help cut down on public spending related to ministerial appointments and the creation of new agencies.
In conclusion, Prof. Bokpin urges the incoming government to extend the IMF program, stressing that it is crucial for ensuring long-term economic stability and credibility. He also highlights the importance of aligning party policies with the fiscal realities dictated by the IMF to avoid triggering further economic challenges.