Why Nkrumah rejected an IMF programme in 1965

An economist at the University of Ghana Business School, Prof. Godfred Bokpin has detailed that Ghana’s first president, Dr. Kwame Nkrumah, rejected a programme from the International Monetary Fund in 1965, due to some inconsistencies with the programme the Fund developed.

According to him, the former President was the first President to take the country to the Fund.

“The first person who took us to the IMF by way of application was Dr. Nkrumah in 1965. The reason his name has not been mentioned in the literature is that after the program has been developed and approved, he rejected it because his fiscal expansionary drive was inconsistent with the dictates of the IMF austerity.

“So, he rejected it, and we are unable to determine how we would have fared without the programme because it wasn’t long and his government was overthrown. But you can see that the template Kwame Nkrumah sent in 1965 is almost the same template we submitted in 2022,” he said during the 11th Ghana Economic Forum on October 24, 2022.

Prof Bokpin however noted that Ghana has had no option but to go back consistently to the IMF for a bailout.

Ghana has had to go to the Fund for support 17 times.

He recounted that the fast response by the Fund on July 1, 2022, when the country made the decision to engage was “amusing” signaling an expectation from the Fund.

The President asked the Finance Minister, Ken Ofori-Atta to begin formal engagements with International Monetary Fund for support on July 1, 2022, after several insistence that Ghana was not going to return to the IMF.

The support is to among other things, shore up the country’s reserves and boost investor confidence in the economy.

However, it is currently unknown when the country will receive the funds as negotiations are still ongoing.

“Ghana loves the IMF, so if you look at it from independence, this economy, and the structures to some extents have also been shaped by the IMF and their recommendations,” Bokpin noted.

Prof Bokpin also noted that even though Ghana managed to leave the Fund at certain points, the country has had no other option but to run back for support as it is unable to thrive without external support.

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“We have had our moments where we filed a divorce with the IMF. That was a great moment for Ghana and that was in 2006 when we had finished the HIPC and the multilateral debt our debt to GDP ratio came down to 30%, around 26% of GDP. That meant we had fiscal space,” he added.