Govt on track with reforms — IMF
Ghana is on track to achieving agreed results under its programme with the International Monetary Fund (IMF), the Head of the Ghana Mission of the fund, Mr Joel Toujas-Bernate, has observed.
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He said Ghana met virtually all the performance criteria under its current fiscal consolidation programme in 2015.
At the end of its third review since the programme began in April last year, the IMF said in a release read to the media in Accra yesterday that implementation of the programme was “broadly satisfactory” and on track to achieving the agreed results.
In April last year, Ghana signed a three-year extended credit facility (ECF) programme with the IMF to help stabilise the economy and restore macroeconomic confidence.
The US$918-million backed facility has since helped ease overall deficit from 10.6 per cent of gross domestic product (GDP) in 2014 to 6.7 per cent of GDP in December last year
Since the programme started, the country has scored satisfactory results from all the reviews, with higher hope of maintaining that record in the coming reviews, although election year pressure risks derailing it.
Surmounting challenges
At a press conference in Accra, Mr Toujas-Bernate said the country met all the performance criteria after successfully surmounting a myriad of local and international challenges which confronted the economy within the period.
Those challenges, he said, partly led to some “small deviations” in targets on the wage bill and net domestic assets at the Bank of Ghana (BoG).
“Despite the more difficult global environment, with lower commodity prices and domestic power shortages, economic growth in 2015 was close to four per cent, slightly higher than expected.
“Inflation, which remained still high at 19.2 per cent in March 2016, is being affected by the increase in utility tariffs, energy sector levies and transportation costs, but core inflation has started to decline in recent months,” he said after holding discussions with the government’s economic management team and donor partners.
The discussions, the third since April last year, focused on the implementation of the programme, the medium-term outlook and policies and structural reforms needed to restore debt sustainability.
They also touched on how the fund could assist the country and managers of the economy, in particular, to return the economy to high growth and job creation, while protecting the poor.
Economist’s reaction
Commenting on the IMF Mission’s statement, Mr Leslie Dwight-Mensah, an economist with the policy think tank, the Institute for Fiscal Studies (IFS), said in a separate interview that a full picture of developments in the economy would be gained when an in-depth review was published, following consideration by the IMF Board.
“The headline numbers show substantial fiscal consolidation was achieved in 2015, which is a welcome break from the patchy outcomes in 2013-14. Weaknesses, however, remain in the management of inflation, the debt level and debt cost,” he said in an email to the Daily Graphic.
He observed that the gravity of the country’s debt level could not be overstated, given that economic growth had failed to match up with the borrowing rate.
“Continuing to bring down the deficit with as little cost as possible to productive public investment is, therefore, necessary to revamp stability and strong growth,” he added.
IMF Support for taxes
Explaining further, Mr Toujas-Bernate said the country made steady progress in the implementation of some fiscal structural reforms, although some of them were at a slower-than-expected pace.
On the taxes introduced in January, this year, he said the mission welcomed “the recent adoption of several new taxes and progress in the strengthening payroll controls”.
It also welcomed the steps taken at addressing irregularities, along with advancing public financial management reform and the setting up of a single treasury account.
Fast-track structural reforms
While admitting that fiscal adjustment under the programme was well on track, Mr Toujas-Bernate said some proposed reforms had lagged behind schedule.
An example, he said, was the proposed introduction of the Public Finance Management Act and the amendment of the BoG Act.
He, however, explained that the fund would support the government to complete work on the two laws, as well as devise a credible strategy to deal with the financial situation of state-owned enterprises (SOEs).
On structural reforms, Mr Dwight-Mensah of the IFS observed that “the delayed structural reform effort is also of little concern, as these are aimed to tackle some of the fundamental causes of poor fiscal outcomes”.