Ghana Hops Into The Belly Of The IMF – Here They Cometh

It is indeed sadomasochistic to put yourself into the belly of a man eating beast also known as the IMF. But some nations indeed enjoy doing that as we have just found out. One of the latest reports culled from Reuters indicates that Ghana “reached an agreement with the International Monetary Fund (IMF) on Wednesday for a three-year aid deal worth around $1 billion aimed at restoring fiscal stability to the West African state, a source close to the talks told Reuters.”

All this marks perhaps a mishap of a turning point for Ghana, which though has become a beacon of stable democracy in West Africa and still a major producer of gold, cocoa and oil, rather struggles to keep afloat an economy that lost much of its shine since it reported a budget deficit of nearly 12 percent in 2013.

Since 2013, Ghana’s GDP growth slowed sharply to a projection for 2015 of 3.9 percent, after many years of an 8 percent per annum growth. At the same time, the currency fell 31 percent last year and the public debt has more than soared.

The Ghanaian Government decided in September that its own solutions to its fiscal crisis were failing to convince outside investors.

“We have concluded the talks at the staff level and we’re looking forward to the Board’s consideration in coming weeks,” said a government official who declined to be identified.

The report said that John Mahama hopes the IMF deal will enable the economy to rebound well before elections in 2016. It makes one wonder if President John Mahama or his team of economics policymakers have been following the IMF and European Central Bank (ECB) debacle in Greece.

The austerity conditions which almost certainly come with IMF loans have devastated Greece and other countries in Southern Europe who all happen to be part of the EU. The human cost to Greece from IMF imposed austerity has been horrendous. The prima facie case of Greece clearly demonstrates that the IMF on steroids neoliberal prescription of austerity in exchange for money does not work.

Another example is Ukraine where IMF loans to that sorry country have come with harsh austerity conditions involving cuts in social services, freezing of pensions and privatization of state owned enterprises to western firms with the attendant retrenching of workers adding to an already explosive social time bomb.

As of today, the Ukrainian currency the Hryvnia is trading at more than 35 to the dollar and has fallen more than 44% in just the first two months of 2015. It was also announced this week that Ghana and Zambia have a higher minimum wage than the Ukraine. This is partly a result of the austerity packed billions of dollars of IMF money. The IMF as a condition to further releases of money for the Ukraine has demanded more savage cuts in social spending.

Is this what Ghana wants as a condition to obtain money from the IMF? What is the social cost to an already impoverished Ghanaian populace? We note that if the IMF has demanded savage social cuts in EU countries like Greece and Spain where unemployment has soared to more than 25% and youth unemployment in particular hovering around 51%, then how much more in an African country like Ghana which is not white and European? It is left to the reader to use his rich imagination.

The religion of the IMF is neoliberal economics with the bitter medicine of austerity that has devastated many countries in the world and especially in Africa. Their intellectual framework arose out of the free market fundamentalism fashioned by Milton Friedman and his jihadi economics disciples at the University of Chicago.

The sad reality is that many African economists who study this brand of economics in the west and adhere to it like it is the bible of economic truth are the prime proponents of IMFnomics in Africa. These African economists demonstrating intellectual myopia and laziness refuse to think beyond their jihad economics training in the west.

Let us look at the words of the current Syriza Finance Minister of Greece Yanis Varoufakis who is in the limelight now due to the debt crisis in Greece. This was written in his book “ECONOMIC INDETERMINACY: A personal encounter with the economists’ peculiar nemesis.” Some of the abstract is telling;

[quote_box_center]

What is both startling and scandalous about economics is the surreptitious conversion of the economists’ theoretical Waterloos into discursive triumphs, which then unashamedly prop up toxic economic policies and toxic financial ‘products’.

But how is this astonishing conversion of failure into power realized?

This book illustrates a sequence of theoretical moves, The Dance of the Meta-axioms, by which economists, with the panache of master magicians, prevent their audience from noticing the crucial obfuscating move.

The book explains why attempts at modelling both complexity and time are bound to come up against the economists’ reliable nemesis: radical indeterminacy. At that point, younger scholars come up against a hideous ethical dilemma: Will they acknowledge that the rules of indeterminate processes are themselves indeterminate? Or will they perform the Dance of the Meta-axioms, violating logic but, in the process, succeed in ‘closing’ their models and securing tenure? If they refuse to comply with the Dance, they will be ejected from the profession. If they dance to its tune, they will be helping economics reproduce its power by ruling themselves out of any serious engagement with the logic of really-existing capitalism.

Quite possibly, never before has intellectual history fashioned an ideological triumph of this magnitude out of a sequence of sorry, yet powerfully motivated, theoretical failures.

[/quote_box_center]

What he says here is revealing as we x-ray his words here: If they refuse to comply with the Dance, they will be ejected from the profession. If they dance to its tune, they will be helping economics reproduce its power by ruling themselves out of any serious engagement with the logic of really-existing capitalism.

The whole of modern western economics is built on bullshit wrapped in respectable intellectual garb which African economists have unthinkingly swallowed and slavishly enforce them according to the dictates of their western economics masters. The beaming face of Ghana’s Finance Minister Seth Terkper on clinching the IMF deal says it all. He is obviously oblivious of the major cracks in the foundation of western economics and the dawning realization that a new economic model is needed. The western developed and IMF enforced economic model has lost its legitimacy to the non-western world.

As Ghana willingly moves into the belly of the IMF beast to be digested by IMF acids masquerading as economic and financial prescriptions, we can hope that this will provide the needed spark to begin the process of Africa decoupling from the western economic and financial system.

The hope then is that African economists will begin to wake up from their beer induced slumber and begin to construct a system of economics based on African economic and social history. They should study how financial markets functioned in pre-colonial Africa. What were the principles on which African historical economics was built? How can that be adapted to the modern African world to create prosperity for the African masses and not for a narrow 1 Percent? The intellectual onus is on them. We are waiting.