The IMF, Greece And The Cries Of Senchi

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Parent Category: Our Country

Category: Business & Finance

Created on Saturday, 09 August 2014 00:00

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The IMF, Greece And The Cries Of Senchi

Review: “Ghana-US sign $498m compact as ECG management set to be outsourced” [Myjoyonline, 06 August 2014], and the Backlash of Greece’s Hidden Borrowing and the EU and IMF Economic Bailout

ABSTRACT

Flashback- FINANCE [BBC]: “Eurozone ministers have agreed to cut Greece's debts by a further 40bn euros ($51bn; £32bn), as well as releasing 44bn in bailout money and aid. A few weeks earlier, they had also agreed to give the government in Athens two more years to cut its overspending. That decision came as Greece's parliament approved a budget for 2013 that involves 9.4bn euros of spending cuts, a budget that triggered mass public protests in Athens. The delay in releasing the latest bailout money was largely due to wrangling between eurozone lenders and the International Monetary Fund (IMF) over whether and by how much to cut Greece's debt, which will inevitably grow even more if Athens continues overspending for longer than previously planned. Why is Greece in trouble? Greece was living beyond its means even before it joined the euro. After it adopted the single currency, public spending soared. Public sector wages, for example, rose 50% between 1999 and 2007 - far faster than in most other eurozone countries. The government also ran up big debts paying for the 2004 Athens Olympics. And while money flowed out of the government's coffers, its income was hit by widespread tax evasion. So, after years of overspending, its budget deficit - the difference between spending and income - spiralled out of control. Moreover, much of the borrowing was concealed, as successive Greek governments sought to meet the 3%-of-GDP cap on borrowing that is required of members of the euro.”[1]

INTRODUCTION

The background to the Senchi Economic Forum[2], is to unlock a lasting home-grown solution to the Ghana’s emerging debt crisis that have stifled its fragile finance and economic gears. Opponents [3] speculate however, that the government had already pledged a set of reforms between 2014 and 2017 (including retrenchment of some 300 public workers) which had communicated that policy document to the IMF- that the said local initiative had formally been sealed by the Bretton Woods systems during its Spring Meetings in Washington DC. So they are right not to be conduit to an ill-informed IMF deal?