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Business News of Thursday, 22 September 2022


Reform global financial system skewed against emerging economies like Ghana - Akufo-Addo

President Akufo-Addo speaking at 77th United Nations General Assembly President Akufo-Addo speaking at 77th United Nations General Assembly

President Nana Addo Dankwa Akufo-Addo has said that the time is ripe for the reformation of the international financial system.

Addressing the United Nations General Assembly, on Wednesday, 21st September, in New York, the President said the financial system in its current state has been skewed against African countries as well as emerging and developing economies such as Ghana.

He observed that as the world grappled with the ravages of the Covid-19 pandemic, the ongoing Russia-Ukraine war and rising inflation rates, small nations have been shut out of avenues opened to big nations to ease pressure on their economies.

“There is record inflation in the euro zone. Several African countries have inflation rates surging three to four times higher than what they were just two years ago. In Ghana, we are experiencing the highest inflation for 21 years. The high costs of food are hurting the poor, especially the urban poor, the most.

“Moreover, the spillover from central banks raising interest rates to combat inflation has been severe beyond borders, as global investors pull money out of developing economies to invest in bonds in the developed world,” President Akufo-Addo said.

“This has led to depreciating currencies and increased borrowing costs; meaning we need to raise and spend more of our own currencies to service our foreign debts in US dollars.

“It has become clear, if ever there was any doubt, that the international financial structure is skewed significantly against developing and emerging economies like Ghana. The avenues that are opened to powerful nations to enable them take measures that would ease pressures on their economies are closed to small nations,” he added.

President Akufo-Addo further lamented the downgrade of African economies in the midst of the global crisis.

He said the tag on Africa as an investment risk was only borne out of prejudice to stamp out countries on the continent from accessing cheaper borrowings and plunging it into debts.

Akufo-Addo observed that the financial market has been structured in a way to favor the rich and powerful nations to the detriment of the less powerful.

He mentioned that it was the lesson African countries will draw from the global crisis stressing however that the financial system should be reformed.

“To make matters worse, credit rating agencies have been quick to downgrade economies in Africa, making it harder to service our debts.

“The tag of Africa as an investment risk is little more than, in substance, a self-fulfilling prophecy created by the prejudice of the international money market, which denies us access to cheaper borrowing, pushing us deeper into debts.

“The financial markets have been set up and operate on rules designed for the benefit of rich and powerful nations, and, during times of crisis, the façade of international co-operation, under which they purport to operate, disappears.

“These are the savage lessons that we have had to take in, as the world emerged from the grip of the coronavirus to energy and food price hikes, and a worldwide rise in the cost of living. The necessity for reform of the system is compelling,” President Akufo-Addo said.

Ghana’s economy according to government has been hard hit by the COVID-19 pandemic and the ongoing Russia-Ukraine war.

The situation has resulted in citizens reeling under economic pressure as they lament the increasing cost of living.

Amidst the turmoil, Ghana’s economy has suffered a downgrade by rating agencies such as S & P and Fitch – a situation that has become an impediment to the government’s ability to access the international capital market.

Government has consequently turned to the International Monetary Fund for a programme. It is expecting $3 billion over a three-year period.

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