The International Monetary Fund (IMF) has given Ghana the thumbs up for implementing the fund’s Extended Credit Facility (ECF) program so far satisfactorily and meeting all the August 2015 performance criteria set.
The IMF Executive Board is also tentatively expected to consider the review of Ghana under the program proper by the end of the year after finalization of the required documentation.The fund also welcomed steps taken by the government in addressing payroll irregularities and advancing public financial management reform
“Looking ahead, given the high level of public debt and financing constraints, the planned fiscal adjustment under the program will be strengthened in 2016.
It however says despite Ghana making progress in implementing fiscal structural reforms, it was at a slower pace than expected in some areas.
The IMF made the assertions in a statement after meetings between it and government officials to discuss the second review of Ghana’s financial and economic program, supported by the IMF’s Extended Credit Facility concluded today.
The IMF team led by Joël Toujas-Bernaté, visited Accra from October 21 to November 5, 2015.
The discussions focused on the implementation of the ECF program, the medium-term outlook and policies needed to restore debt sustainability, macroeconomic stability, and a return to high growth and job creation while protecting the poor.
The mission met with President John Dramani Mahama; Finance Minister Seth Terkper; Bank of Ghana Governor Henry Kofi Wampah; Dr. Kwesi Botchwey, Chairman of the National Development Planning Commission; other senior officials; and the donor community.
Despite commending Ghana for its performance so far the fund warned that the ‘budget will also face additional spending needs from the (one-off) costs related to next year’s elections and a nominal wage bill increase now projected to be slightly higher than envisaged under the program, while earmarking of revenues for statutory funds continues to reduce budgetary flexibility’.
According to the IMF Ghana recognizing these challenges, after discussions with the mission, ‘prepared a package of revenue and spending measures for the 2016 budget to bring the fiscal deficit down to 5.3 percent of GDP next year, instead of 5.8 percent envisaged in the program’.
The mission believes steps to contain losses in state owned enterprises will also be particularly important to prevent additional fiscal pressures.
“Further fiscal adjustment along with tight monetary policy should help to restore macroeconomic stability.
Meanwhile the fund has also commended the Bank of Ghana for ‘building on its recent progress to improve the effectiveness of its inflation targeting framework’, it believes ‘ the Bank of Ghana remains committed to adjusting the monetary policy stance, as necessary, to bring inflation down toward its medium-term objective.
This, together with the recent build-up of foreign exchange reserves, should also contribute to reducing the volatility of the cedi’.