Former Deputy Governor of the Bank of Ghana, and running mate of the opposition New Patriotic Party (NPP), Dr. Mahamudu Bawumia, has asked Ghanaians to take government’s perceived progress in the International Monetary Fund’s (IMF) review under the Extended Credit Facility (ECF) program with a pinch of salt.
In his view, the perception that “Ghana has passed the test is wrong. They haven’t yet gone to the board. The talks haven’t concluded. Many people in Ghana did not know this.”
In May, the IMF mission to Ghana announced that the country had passed its third ECF review test with satisfactory results. Ghana entered into the ECF programme with the IMF in 2015, and the country is expected benefit from US$940 million in a number of tranches.
Two tranches have already been disbursed
The head of the IMF mission, Joel Toujas-Bernaté said, “We have seen most of the targets and performance criteria in the end of 2015 being achieved with just small exceptions.
The economic performance has been slightly better than expected.”
IMF talks ‘completely inconclusive
But speaking in an interview on the Citi Breakfast Show, Dr. Bawumia contended that the third review was actually inconclusive.
According to him, “The way it has been presented to the public, one would say that Ghana has passed the third review, the test. It will surprise you to know that in fact, that was not the case. The talks between the IMF and Ghanaian government were inconclusive, completely inconclusive.”
Dr. Bawumia, a former Deputy Governor of the Bank of Ghana, indicated that the IMF has not taken Ghana’s proposal to its board for approval because it still has some concerns “which they expect Ghana to address before they go to the board.”
‘The banking sector risk’
One of the major concerns of the IMF is Ghana’s banking sector per Dr. Bawumia’s submission, and he said the IMF is waiting for a plan aimed at addressing what he described as a potential crisis.
“Our banking sector today is in a potential crisis. The IMF wants something to be done about it, a plan to be presented about how we are going to recapitalize these banks. Some of the banks are in potential crisis from BDC exposures, from micro-finance exposures, from state-owned enterprises exposures.
This is a major concern that the IMF has,” he explained.
IMF waiting for further documentation
Dr. Bawumia also noted that, as a caveat, some further documentation is required for the programme to move forward.
“But if those things, those caveats, what is required at the end of the statement, which tells you things about the Bank of Ghana, the public financial management reform and so on, if those things are not done, the programme will not move forward,” he stated.
He maintained that if government did not satisfy the IMF, it would then mean they “have failed the third review.”
“So government would like us to believe that they passed the test; but in fact, they have not passed the test. There is still work to be done and this is something we have to understand,” he concluded.