Completion of the review enables the disbursement of about US$116.6 million, bringing to total disbursements under the arrangement to about US$233.1 million.In completing the review, the Executive Board also granted waivers for the nonobservance of performance criteria regarding gross credit to government, and non-accumulation of external arrears, based on their minor and temporary nature and the corrective measures put in place by the authorities.
The Executive Board also approved Ghana’s request for modifications of performance criteria.
Ghana’s three-year arrangement for US$918 million was approved on April 3, 2015.
The facility is expected to restore debt sustainability and macroeconomic stability in the country to foster a return to high growth and job creation, while protecting social spending.
According to the IMF’s Acting Chair and Deputy Managing Director, Mr. Zhu, the implementation of the IMF program by government has been broadly satisfactory, despite an unfavorable economic environment.
The IMF believes in particular, ‘government’s fiscal consolidation efforts are on track and it is encouraging that government decided to liberalize the prices of fuel products, which bodes well for expenditure control, eliminating the need for fuel subsidies and the incurrence of arrears.
According to the IMF in a statement “government should firmly continue with its fiscal consolidation efforts to fully restore macroeconomic stability and mitigate financing risk’.
However the IMF also wants government to also continue the policy of controlling the wage bill by adhering to the net hiring freeze, excluding for health care and education, while further implementing the payroll clean-up plan which it says is crucial.
The IMF also wants government to continue to adhere to the domestic arrears clearance plan and avoid incurring any new arrears as well as implement structural reforms to strengthen expenditure control which will support its efforts.
Meanwhile the IMF has asked government to identify the full cost related to the elections as early as possible and make provisions for it in the 2016 budget to avoid the risk of fiscal overruns.
On the Bank of Ghana the IMF wants the monetary policy stance of the central bank to remain tight to help bring inflation down, against the background of exchange rate volatility.
It says the Bank of Ghana should stand ready to tighten monetary policy further if inflationary pressures do not recede as expected.