Do our governments really mean what they say? Over the years, many government’s policy positions when contrasted with actual achievements, often fall short of their intended goals. They are good at selling forward looking ideas but usually by the end of their terms, not much is usually achieved. We know of “The year of roads”, “production not taxation”, “Changing the Guggisberg economy”, “improving domestic tax revenues”, the “fight against galamsey” and many more positions which never really came into fruition, of all governments since the 4th republic.
In May this year, the Government of Ghana voluntarily submitted to a non-financing IMF Policy Coordination Instrument (PCI) which demands strict adherence to market rules and transparency, yet several of the government’s own core policy operations are directly in conflict with the market rules. Why on earth will a government want to score such an unforced error? The reality is that the IMF promotes an ultra-market driven policies but, in a country where market distortions are the order of the day, why on earth will a “social-democratic government” want to commit to something it cannot hold up to?
Ultimately, the PCI is a “signal” of good behaviour. Why are we desperate to let the IMF know we are going to be of good behaviour? Do we also know the policy tightrope we are going to walk in balancing the distortions in the national economy against market perfections? And do we also not know, when the behaviour itself is inconsistent the signal loses its value?
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The “Sovereignty vs. Credibility” Question
The short of it is that the government wants it both ways. It wants the external credibility that the PCI signals to international investors, which helps lower borrowing costs, but it’s unwilling to fully accept the internal constraints that come with it. By signing the PCI, the government effectively promises to outsource key economic decisions to Washington, yet domestic political pressures or short-term operational needs often take precedence, leading to rule-breaking. This government is already breaking the IMF rules:
- In recent time, the IMF had to grant a waiver for a breached performance criterion when the BoG exceeded limit on central bank financing to the government; a direct violation of the “zero monetary financing” commitment.
- Also, the IMF had to remind the BoG that Ghana still maintains its Multiple Currency Practices (MCPs) that generate distortions by using prior-day reference rates for government transactions and applying different exchange rate mechanisms for cocoa and fuel imports. Presumably the government does this to control market distortions.
- In this August, 2026, the Fund noted that currency auctions have “frequently deviated from published guidelines by rejecting the highest bids”—a sign that the government is overriding market mechanisms. But again, the government is fighting market distortion activities of currency speculators. Frankly, the government’s currency auctions guidelines could emphasise government policy position which will mean taking the “lowest bids” instead of the “highest bids” to undercut speculative activities. We should not sign unto rules we cannot keep or rules which are detrimental to our position.
- The fund complained about the Domestic Gold Purchase Programme. It is a classic “quasi-fiscal activity.” While it rebuilt reserves and helped the cedi appreciate 41% in 2025, it generated losses of GHS 22 billion (1.5% of GDP), worsened the BoG’s balance sheet, and temporarily breached IMF programme limits.
These and many other interventions by the government breach the IMF’s purity test of the market rules. But one can argue that the government’s intentions are well founded, to undercut speculative and distortionary market activities. So where is the credibility to achieve with the IMF’s PCI.
Generally, the lack of revenue forces the government to either borrow externally or rely on the central bank for creative financing (like gold purchases), creating a cycle of dependency that the PCI itself is meant to address. To resolve this tension, the focus must shift from signaling credibility to building domestic capacity in:
- Strengthened Tax Administration: Rather than relying on the IMF’s seal of approval, the government must aggressively expand the tax base, formalize the informal economy, and plug revenue leakages
- Combat Illicit Financial Flows (IFFs): Implement a costed, concreteprogrammeto tackle IFFs, particularly in the extractive sector.
- Explore Alternative Financing: ISODEC has pointed out that Ghana could explore financing from the African Export-Import Bank or leverage the Pan-African Payment and Settlement System rather than depending exclusively on IMF/Eurobond sources.
Conclusion
One of the earliest tests of the PCI is the government’s transparency in its development agenda. Under the PCI, government ought to be providing project level information and showing transparent processes in the “big push agenda” yet all we get is aggregated level expenditures. Where is the demonstration of the PCI we signed onto?
The concern about signing onto the PCI affirms the fears that government seem to be more interested in signaling credibility for external borrowing than doing the hard work that can build credible local processes and financing.
Ultimately, the PCI is a “signal” of good behaviour. But when the behaviour itself is inconsistent, the signal loses its value. The solution lies in building a resilient domestic economy that can generate its own resources, so Ghana can define its own rules, not IMF rules.
The Writer, Bernard Anaba is a Policy Analyst and Head of Policy and Programmes at the Integrated Social Development Centre (ISODEC).
