|Ghanaian president John Mahama (left) with finance minister Seth Terkper|
While Ghana’s fiscal and monetary vulnerabilities have prompted the government to seek its second IMF loan facility in three years, rumours abound of a shake-up in the ministry of finance and the central bank, where much of the blame for Ghana’s economic position has fallen.
Euromoney understands from sources close to the Ghanaian government that finance minister Seth Terkper and central bank governor Henry Wampah could be replaced in the next few months.
“The president [John Mahama] aims to replace them as soon as the IMF deal closes,” says the source.
Another contact, a political risk analyst, adds: “The president is under a lot of pressure, especially in the run-up to next year’s election, so at least one of them will be let go at some point soon if he wants to make it look like he is really tackling the economic issues that Ghana faces.
“The minister will be easier to remove and replaced by the president. The central bank governor will be a little more difficult, but by no means impossible."
Ghana’s deputy minister of finance and rising star Mona Quartey is the front-runner for either position, says the initial source. Educated in Canada and in Ghana, Quartey has a wealth of experience, previously having worked at Citibank and at Citicorp Investment Services in the US as an investment banker.
Now back in Ghana, Quartey has been deputy at the ministry of finance since June, is a non-executive director at Universal Merchant Bank and is building up a strong reputation for herself.
“Mona will have her pick," says the source. "She may choose to become minister of finance and lead an institution that she is familiar with, but on the other hand the central bank governor job is slightly more attractive at this point.
"With the elections coming up next year, and considering how tight they can usually be, there are no assurances that Mahama’s National Democratic Congress (NDC) will remain in power. She might be out of the position as soon as she takes it up.”
The NDC won the 2012 general election in Ghana with 50.7% of the vote. The New Patriotic Party came in a close second with 47.7%. The 2016 election is likely to be even closer and a change of leadership is possible.
Another potential candidate for minister of finance is Nii Moi Thompson. He is the director-general of the National Development Planning Commission, economic adviser to the president and his confidant, say commentators.
Botchwey was the chairman of the IMF's group of independent experts, who conducted the first external evaluation of the enhanced structural adjustment facility for Ghana.
However the situation unfolds, Ghana’s leadership is set for an uphill struggle. Commodity prices have contracted over the last year, hitting Ghana’s exports of gold, oil and cocoa, and imports are on the rise.
The stress on the economy has been exacerbated by sometimes ill-informed policies by both the central bank and the ministry of finance, say some commentators.
Terkper, who was deputy minister of finance from 2009 to 2013 before taking the top position in the ministry, has been criticized for slow reform, especially in terms of addressing the wage bill – accounting for nearly 50% of government spending – and tax collection reform.
Hundreds of ghost names remain on the pay role while Ghana suffers high twin deficits: a current-account deficit at 13.2% of GDP and a fiscal deficit at 9.6%.
On the monetary side, the cedi has been one of the worst-performing currencies globally, devaluing 31% against the dollar last year alone. Inflation hit 17% in December.
In response, governor Wampah hiked up interest rates by 200 basis points and tightened foreign currency regulation in February 2014 in an effort to stem the free-fall of the currency, but it remains in the line of fire. Wampah has spent his working career at the central bank, starting as deputy manager in 1986 before working his way up the ranks and became governor in April 2012.
The IMF loan facility, which has been on the table since October, is due to close in March this year. Analysts reckon the facility will be worth around $1 billion and will be issued in tranches, depending on how the government meets several conditions set by the IMF relating to tax revenue and reforming the wage bill.