Ghana officially leaves IMF bailout today

Company News of Tuesday, April 2, 2019

Source: dailyguidenetwork.com

2019-04-02

Ghana is preparing to officially exit the International Monetary Fund (IMF) Expanded Credit Facility (ECF) program today, April 2, 2019.

The Board of the International Monetary Fund has completed the seventh and eight reviews under the extended credit facility support agreement.

The completion, which took place on Wednesday, March 20, made available to Ghana the cumulative amount of 132.84 million SDR (Special Drawing Rights) (about 185.2 million USD).

In a press release issued last month by the IMF, "the Governing Council decided, in view of the authorities' willingness to tackle difficult reforms, to lift the request for a waiver of non-compliance. some program objectives. "

"The three-year contract with Ghana was approved on April 3, 2015 (see press release No. 15/159) for SDR 664.20 million (approximately US $ 925.9 million, or 180 million US dollars). % of the quota at the time of approval of the agreement). It has been extended for an additional year on August 30, 2017 and must end on April 2, 2019. "

According to the statement, "the agreement aimed at restoring debt sustainability and the country's macroeconomic stability in order to foster a return to strong growth and job creation, while protecting social spending. "

According to Tao Zhang, Deputy Director General and Interim President, "The authorities have achieved significant macroeconomic gains during the ECF-supported program, with increasing growth, single-digit inflation, fiscal consolidation and a sound banking sector. . Continued macroeconomic adjustment should underpin these improvements as we approach the 2020 elections.

"As a sign of the authorities' commitment to fiscal consolidation, the fiscal targets for the end of 2018 have been achieved. Sustained fiscal discipline is needed to reduce financing needs and anchor debt dynamics. As stronger revenue mobilization is essential, the introduction of the tax exemption bill is welcome, but needs to be complemented by efforts to strengthen tax compliance. Budget space is needed to support priority programs, while off-budget spending should be avoided. "

"Progress on structural reforms needs to be stepped up. Projects aimed at improving the management of public finances and the supervision of state enterprises, the creation of a tax council and the tax rule are welcome. Enhanced monitoring of budget operations, including for state-owned enterprises, will help mitigate budget risks.

"Debt management has improved, but dependence on foreign investors has increased Ghana's exposure to market sentiment and currency risk. Debt collateralisation and income monetization must be limited to avoid incurring income. Planned infrastructure projects must be managed transparently, be compatible with debt sustainability and ensure value for money.

"Single-digit inflation is certainly commendable, but monetary policy must remain vigilant to guard against upside risks to inflation, which are also linked to exchange rate developments. The rebuilding of international reserve badets, including through prudent management of foreign currency liquidity, is welcome and is essential for building resilience to external shocks.

"The authorities deserve praise for strengthening the banking sector and for the resolution of nine banks. The completion of the cleaning of the financial sector, as planned, will provide adequate and affordable credit to the economy.

"The Fund congratulates the authorities for completing the ECF-supported program and stands ready to support Ghana in its quest for economic prosperity."

The ECF is a loan agreement that provides for a medium and long-term program commitment in case of prolonged balance of payments problems.

Insurance

Ghana's Minister of Finance Ken Ofori-Atta said Ghana would maintain the tax disciplines introduced during the deal, even if it left the program.

He said the country has had excellent relations with the IMF over the years and that rigorous reviews will continue even if "there is no money on the table.