IMF awaits operational update on cash-strained SOEs
The Ministry of Finance is due to present data on the financial status and performance of some state-owned enterprises (SOEs) to the International Monetary Fund (IMF) later this month to pave the way for its Executive Board to meet and approve the country’s last review report.
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The statistics would include the government’s plans for the cash-strained SOEs, majority of which are in the energy sector, a deputy Minister of Finance, Mrs Mona Quartey, told the Graphic Business in Accra.
She explained that the bulk of that data bordered on the government’s plans for the legacy debt of the Volta River Authority (VRA), the GH¢2.2 billion liability that has now been restructured to be repaid in instalments with proceeds from energy sector levies.
The deputy minister explained that the IMF requested an update on those issues to help it to determine how the operations of the SoEs would impact on the well-being of the economy and its projected growth in the short to medium term.
Delayed disbursement
The presentation of the data and the subsequent meeting of the fund’s Executive Board will, therefore, determine whether or not the country qualifies to receive the third tranche of the US$918 million, which has already been delayed for some three months.
The data, which will include an update on the ongoing release of the Electricity Company of Ghana (ECG) under a concessionary arrangement, was a prerequisite to the third review of the economy under the Extended Credit Facility (ECF) programme.
The ECF is a three-year programme the country is using to stabilise the economy and gain policy credibility for its home-grown policies.
Under the US$918 million-backed facility, the country is expected to meet laid down criteria under the periodic reviews as a prerequisite to the tranche disbursement of the funds, which are used to support current account operations.
A third review scheduled for June this year was postponed due to what Ms Quartey said was the unavailability of the relevant data.
“We are just preparing the data and once we have done that they should be able to go to their board and then the next tranche would be released to us,” she said, referring to the US$114.6 million that the country will get should the performance criteria meet the requirements of the review process.
Although the fund had earlier expressed reservations about portions of the Bank of Ghana (Amendment) Act, the deputy minister said her outfit covered most of the requirements under the third review.
“There were several laws that we had to pass, including the BoG Act and the Public Financial Management Act, which have been passed. So, I will say that we have covered most of the prior conditions that needed to be in place,” she said.
Impact of energy sector
Over the years, the energy sector has been dogged with challenges, ranging from operational inefficiencies to liquidity constraints.
In the case of finance, the problem is cyclical with every player owing the other.
From the bottom, consumers of power owe the two distributors, the ECG and the Northern Electricity Distribution Company (NEDCo), in unpaid bills. The two in turn owe the Ghana Grid Company (GRIDCo) and the VRA for power supply and purchases respectively.
At the top of that equation are banks and fuel suppliers, whose continuous show of magnanimity keeps the VRA on its feet.
Due to the web of challenges besetting the extremely important power sector, Mrs Quartey said the IMF was interested in seeing a credible strategy that would ensure viability in the sector.
“The power sector has become, practically fundamental for anything; whether it is agriculture, agro-processing, industry or financial services and so they want to make sure we have in place a viable power industry that can assist in the growth that they expect,” she said.
False theories
She also denied concerns that the delay in the meeting of the Executive Board was due to the fund’s lack of trust for the country’s economic data, explaining that the IMF had reposed confidence in the country since April 2014, when the ECF took off.
“There is no doubt with the data. They have been working with us for over two years now. They have the data on our website and they have actually collaborated with us on the data and so there is no issue with it,” she said.