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Dr. Mahamudu Bawumia, Visiting Professor of Economic Governance at the Central University College and Running Mate to Nana Akufo-Addo for the 2016 Presidential election has chronicled the factors that led Ghana�s economy into the ditch it finds itself and needing an IMF Bailout for redemption. Dr. Bawumia who was speaking on the topic �The IMF Bailout, Will the Anchor Hold� noted that the deterioration in public finances, ballooning and unsustainable public debt, loose monetary policy, deteriorating external payments position and the declining growth rates, had all contributed to a situation where the economy could not meet its obligations and therefore needed a bailout to stabilize the economy. Touching on the deterioration in public finances, Dr. Bawumia said, �notwithstanding all the effort to avoid the oil curse, public finances began to deteriorate as the 2012 presidential and parliamentary elections drew closer. In the 2012 election year, Ghana�s budget deficit was a whopping GH�8.7 billion, amounting to 12.0% of GDP. This is the highest recorded budget deficit in Ghana�s history. �The crux of the problem was that government spending in 2012 increased astronomically to 31.0% of GDP even though government revenues amounted to 18.6% of GDP for the year. This came on the back of a promise by the government to ensure that it maintained fiscal discipline and that previous over-expenditures that had characterized many of our election years were not repeated. On the contrary, the government abandoned all fiscal discipline so as to win the 2012 elections. Following the 2012 election, the government continued to maintain an expansionary fiscal stance and this led to a further deterioration of public finances.� Dr. Bawumia noted that the bad state of public finances had virtually left the economy cash-strapped and unable to satisfy even basic statutory obligations. He stated that the current situation was surprising as the country in the last six years had had access to unprecedented resources in Ghana�s history. In the area of taxation, he noted that while the previous government between 2001 and 2009, received GHC15.2 billion in taxes, the current government had accrued a whopping $62billion in taxes in just the last six years. Again, he noted that while Ghana�s total debt stood at GHC9.5billion as at January 2009, the current government had accrued some GHC66.6 billion from borrowing in the last six years. Again, he indicated that proceeds from gold and cocoa in the past six years had all shot up significantly while the government also had had access to oil revenue, an advantage no government has ever had. �It should be noted that the fiscal deficits as a percentage of GDP in the last three years (at 9.5%, 10.9% and 12% of GDP) have exceeded the 8.6% deficit in 2000 that sent the economy into a tailspin,� he said. On the ballooning and unsustainable borrowing, Dr. Bawumia said, �probably the most significant contributor to Ghana�s current economic malaise is the ballooning and unsustainable public debt less than a decade after being granted HIPC debt relief to the tune of $4.2 billion. The debt relief obtained under HIPC and the accompanying fiscal policy stance resulted in a significant reduction of the debt burden. By the end of 2008, Ghana�s total public debt stood at GH�9.5 billion (33% of GDP). In the last six years however, the stock of public debt has seen a dramatic increase to GH�76.1 billion (67.1% of GDP) at the end of 2014. This is an increase in the stock of debt by 700% (GH�66.6billion) over a six-year period and it represents an average increase in the stock of debt by 116% a year.� �The interest burden of this high public debt stock has proven to be extremely high. In 2015, interest payments alone on the debt would amount to GHC9.57 billion. Interest payments have increased from GHC 679 million in 2008 to a projected GHC9.57billion in 2015 (an increase of 14 fold). Ghana�s total debt in 2008 was GHC9.5 billion but interest payments in 2015 alone would amount to GHC9.5 billion,� he added. Dr. Bawumia explained that these high interest payments occasioned by the astronomic accumulation of debt within the last six years means that money which could have otherwise been spent on critical areas have to be sunk into servicing these debts. �The picture becomes clearer when one compares the amount spent on interest payments to allocations to various Ministries as spelt out in the 2015 Budget. �The total sum allocated to these 8 key ministries (Education; Food & Agriculture, Water Resources, Works & Housing; Transport; Roads & Highways; Trade & Industry; Fisheries; and Health) from the budget (excluding internally generated funds of the various Ministries and donor funding) amounted to GHC952 million. Interest payment on Ghana�s public debt stock in 2015 would amount GHC9.5 billion, i.e. 10 times the combined allocation of these eight critical ministries. This situation is in fact reminiscent of Ghana in the run up to HIPC where the debt burden had taken away critical resources that could have enhanced capital and social expenditure,� he said. The former Deputy Governor of the Bank of Ghana, also mentioned the loose monetary policy of the Bank of Ghana as one of the factors that had led the economy into the abyss it finds itself. �There has been a dramatic increase in central bank financing of government recently (i.e. equivalent to the printing of money), in addition to borrowing to finance the fiscal deficit. Central bank financing (net claims on government) has increased from GH�1.45 billion in 2008 to GH�13.95 billion by 2014, an 863% increase. �The excess printing of money to finance the fiscal deficit causes inflation. In accommodating Government in this manner, the Bank of Ghana is by itself undermining the value of the currency that it is required by law to protect,� he said. Dr. Bawumia cited the declining growth of the Ghanaian economy, as another factor underlining the crisis the economy finds itself in. �The 2015 budget shows an economy in decline. Real GDP growth has declined from 15% in 2011 (with the onset of oil production to a projected 3.5% in 2015 (including oil). The decline in economic growth is reflected across all sectors (Agriculture, Industry and Services). The 2015 budget is projecting non-oil growth of 2.7% in 2015. These facts are as revealing as they are disturbing. The growth rate in 2015 would be just about what it was in the year 2000 and half the rate of the 8.4% achieved in 2008 without oil! Non-oil growth in 2015 will be below the growth rates attained in 2000.� The Visiting Professor, who famously predicted last year that the government will be forced to seek an IMF Bailout, if it continued to manage the economy the way it was being done, also cited the deteriorating external payments position as one of the causal factors that precipitated the economic downturn. �Ghana�s external payments position has also deteriorated (consistent with the deterioration of public finances) with increasing current account deficits and a fragile foreign exchange reserves position. The current account of the balance of payments has seen a steady deterioration over the last four years, increasing from a deficit of $2.77 billion (8.3 percent of GDP) in 2010 to $4.92 billion (12.2 percent of GDP) in 2012 and $5.8 billion (13.2 percent of GDP) in 2013. The deficit narrowed to $3.6 billion (10.2% of GDP) in 2014.� Still on the external payments position, Dr. Bawumia noted the low levels of the Net International Reserves, stating that the level of the Net International Reserves by September 2014 when Ghana began discussions with the IMF, was the worst ever, in terms of import cover, in the country�s history. �The persistently high current account deficits contributed to a significant decline in Ghana�s foreign exchange reserves. Ghana�s net international reserves declined from a peak of $4.4 billion in 2011 (equivalent to 3.1 months of import cover to $950 million in September 2014 (equivalent to 0.6 months of import cover). �In terms of months of import cover, that was the lowest import cover for the NIR since 2000 and the lowest for any middle income or oil producing country in the world,� he said. This state of affairs, led government to call for an IMF Bailout to salvage the sinking state of the Economy. In the nutshell, Dr. Bawumia noted that a health check of Ghana�s economy as at August 2014 when it requested for an IMF Bailout, shows that the economy was characterized by; Declining Real GDP Growth; Rising Cost of Living; Depreciating exchange rate; Declining Net International Reserves.; Increasing Financial Sector Fragility; Deteriorating Energy Situation- Dumsor; Rising Interest Rates; High Risk of Debt Distress; Declining Business Confidence ; Declining Consumer Confidence; Increased Fuel and Utility Prices; Large Fiscal Deficits; Arrears to the District Assembly Common Fund; Arrears to GETFUND; Erosion of Policy Credibility of Government; Increasing Perceived Corruption; Arrears to NHIA; Worsening Sanitation; Rising Youth Unemployment, and Double digit current account deficits among others.