IMF to support Ghana’s economic programme
The International Monetary Fund (IMF) has said it will support Ghana’s economic programme with a financial arrangement once ongoing measures being taken by the government are completed.
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The measures include cleaning up the payroll, finalising the remaining details of their medium-term reforms and seeking external financing assurances from bilateral donors and international institutions.
After a two-week mission to Ghana to discuss Ghana’s next programme with the fund, the IMF said in a press statement that it would, however, continue to support the authorities as they work in the coming weeks in several areas, such as taking concrete steps in achieving the measures.
“The IMF team will continue to support the authorities as they work in the coming weeks in several areas, including taking concrete steps to clean up the payroll, finalise the remaining details of their medium-term reforms and seek external financing assurances from bilateral donors and international institutions,” the IMF Mission, led by Mr Joel Toujas-Bernaté, said in a statement issued at the end of the mission November 21.
Once that work is completed, the statement said, a financial arrangement to support Ghana’s economic programme would be agreed at staff level before being proposed for the IMF Executive Board's consideration.
The mission was in Accra from November 6 to 20, 2014 to discuss the economic and financial programme for the country and a possible financial support from the fund.
The mission met with President John Dramani Mahama; the Vice-President, Paa Kwesi Amissah-Arthur; Dr Kwesi Botchwey, Chairman of the National Development Planning Commission; Finance Minister, Mr Seth Terkper; Bank of Ghana Governor, Dr Kofi Wampah; the Finance Committee of Parliament, other senior officials and representatives of the private sector, the donor community and civil society.
The statement quoted Mr Toujas-Bernaté as saying that following discussions held in Washington last month, the Ghana government had continued to work on the country’s economic and financial programme to address domestic and external vulnerabilities.
It said the parties also made significant progress towards reaching an understanding on strengthened macroeconomic policies, including a medium-term fiscal path that could ensure debt sustainability and reduce current account deficit.
“The mission in particular welcomes the government’s 2015 budget which targets a reduction of the fiscal deficit by 3.5 percentage points of Gross Domestic Product (GDP) on a commitment basis. The budget includes some important measures to increase revenues, eliminate distortive and inefficient energy subsidies and contain growth in Ghana’s comparatively high public wage bill, while allowing for public investment above five per cent of GDP, as well as increasing social protection spending targeted at the most vulnerable.”
“The mission also welcomes the government’s aim to implement structural reforms to underpin a sustained consolidation towards a fiscal deficit objective of 3.5 per cent of GDP by 2017. Reforms will include strengthening public finance management, reducing tax exemptions, enhancing tax administration and reviewing the earmarking of revenues for statutory funds.”
It also acknowledged initiatives to clean up the payroll and enhance its management, but stressed that it “should be pursued swiftly.”
The IMF said the implementation of appropriate pay and employment policies would help further control the wage bill, which had been a significant source of fiscal risk, adding that the measures should also boost the effectiveness of the Bank of Ghana’s inflation targeting framework in helping to restore macroeconomic stability.
