The International Monetary Fund (IMF) has proposed four key solutions to transform the fundamental structure of Ghana and other African economies, propelling them into higher-middle-income status.
It includes a holistic combination of education in people and human capital development, heavy investment in infrastructure, growth‑enhancing reforms, and improved governance.
These approaches, Ms Kristalina Georgieva, Managing Director, said would enable countries in the middle‑income trap for the past two decades to break out and reach a higher-middle income status, increasing growth to about eight per cent.
She said this in response to a question asked by the Ghana News Agency at the launch of the Fund’s Global Policy Agenda, on the margins of the 2024 IMF/World Bank Group (WBG) annual meetings in Washington DC (USA).
According to the 2024 World Bank World Development Report, only 43 out of the 108 countries classified as middle-income countries have reached higher-middle-income status for the past two decades, leaving 74 countries trapped.
Ms Georgieva noted that there was evidence to show that countries could break out of the middle‑income trap through an inclusive approach, centred on people, infrastructure, growth reforms and good governance.
“We have seen throughout history how countries break out of this middle‑income trap, and it is a combination of four things; invest in education, in people, in human capital, [and] invest in infrastructure,” she said.
“These days digital infrastructure is hugely important. It has to be equitable. Invest in governance, rule of law, transparency, and accountability to the public, and cooperate. Learn from others, engage with others, and I think this is where countries need to go,” she added.
She indicated that the Fund’s studies had proven that through growth‑enhancing reforms, countries could move into higher-middle-income status, leading to a growth trajectory of up to eight per cent.
“So, it is that determination and engaging the public, creating public support that brings results,” the IMF Managing Director said while encouraging global partnerships.
She said the Fund continually works with lower-middle income countries to identify that pathway on a country-by-country basis, providing country‑specific directions and reforms that could help them reach a higher-middle-income level.
Making a reference, she said, “I always like to give the example of Jamaica because Jamaica was a country 10, 12 years ago, it was a country with very high debt, a lot of crime. People were kind of desperate for their future.”
Nonetheless, she said, “[Jamaica] brought that down by half and they moved the country in a very positive growth trajectory by that holistic approach to development.”
“So, basically, for low‑income countries, this is not given that you cannot break out of it, but it does require a comprehensive programme of reforms. It does require consistency of implementing these reforms. And it does require bringing public support for it,” said Ms Georgieva.
The IMF in its Global Policy Agenda has pushed for increased effort in securing a soft landing of economies, breaking out of the low‑growth-high‑debt path by carrying out pro‑growth reforms, including cutting red tape and improving governance.
“As we tackle these challenges, it is also essential that we continue to cooperate on climate, technology, debt, trade. Only by working together can we seize the opportunities and mitigate the risks of these great changes,” said Ms Georgieva.
Source: GNA