Ghana's recent economic performance is favorable – IMF mission

Economic News from Sunday, February 24, 2019

Source: kasapafmonline.com

2019-02-24

The IMF's Executive Board is expected to consider the seventh and eighth reviews of Ghana's Extended Credit Facility (ECF) program by the end of March 2019.

Completion of these reviews would provide SDR 132.84 million (approximately USD 188 million), bringing total program disbursements to approximately SDR 664.20 million (USD 920.58 million). ).

The visit comes after a visit by a team of the International Monetary Fund (IMF) led by Annalisa Fedelino, who visited Accra from 12 to 21 February 2019 to conclude discussions on the seventh and eighth joint reviews of the country. Ghana's economic reform program with extended credit facility.

The mission met with Vice President Mahamudu Bawumia, Minister of Finance Ken Ofori-Atta, Governor of the Bank of Ghana, Ernest Addison, other senior officials, as well as representatives from the private sector, business and public sector. civil society and development partners.

The team at the end of its visit observed that "Ghana's recent economic performance has been favorable, despite a less favorable external environment for the border economies".

The country's program with the IMF will end in April 2019.

The Board of Directors of the International Monetary Fund (IMF) approved in 2015 a three-year agreement under the Extended Credit Facility (ECF) for Ghana, amounting to equivalent to SDR 664.20 million (180% of the quota or approximately USD 918 million). medium-term economic reform program of the authorities.

The government's three-year economic reform program aims to support growth and reduce poverty by restoring macroeconomic stability through ambitious and sustainable fiscal consolidation, a prudent debt management strategy with increased fiscal transparency, and a comprehensive framework. effective monetary policy.

IMF end-of-mission press release

Staff completes discussions on Combined Seventh and Eighth Combined Credit Program Reviews of Ghana

End-of-mission press releases include statements from IMF staff teams transmitting preliminary findings after a visit to a country.

The views expressed in this statement are those of the staff and do not necessarily represent the views of the board of directors.

* The Ghanaian authorities and the mission concluded discussions, ad referendum, on economic policies in order to pave the way for the review by the IMF's Executive Board of the 7th and 8th of the agreement supported by the FEC, which would complete the program successfully.

* Domestic revenue mobilization should remain a key priority to create fiscal space and reduce public debt. The authorities should continue their efforts to implement fiscal policy measures, including exemptions and tax compliance measures.

* Monetary policy should remain cautious and complement fiscal adjustment efforts to maintain anchored inflation expectations.

An International Monetary Fund (IMF) team led by Annalisa Fedelino traveled to Accra from 12 to 21 February 2019 to discuss the 7th and 8th combined reviews of Ghana's economic reform program with a extended credit.

The mission met with Vice President Mahamudu Bawumia, Minister of Finance Ken Ofori-Atta, Governor of the Bank of Ghana, Ernest Addison, other senior officials, as well as representatives from the private sector, business and public sector. civil society and development partners.

At the end of the mission to Accra, Ms. Fedelino issued the following statement:

"Ghana's recent economic performance has been favorable, despite a less favorable external environment for border economies.

Real GDP grew by 6.7% in the first three quarters of 2018. In the medium term, growth is expected to remain strong, reinforced by recent oil discoveries. Consumer price inflation, which now stands at 9.0%, is well within the target range of inflation.

The overall fiscal deficit reached 3.7% of GDP rebased (excluding financial sector costs) and the primary surplus (overall budget balance excluding interest costs) was in line with program objectives.

At the same time, the economy experienced some pressure in the second half of 2018, mainly due to the rebalancing of portfolios by foreign investors, in the context of a stronger dollar, rising US interest rates and volatility. emerging markets, resulting in lower external buffers.

"The implementation of the ECF-supported program has progressed well and will end on April 3, 2019 as planned. By the end of December 2018, six quantitative objectives of the program had been achieved and structural reforms were progressing.

"The Ghanaian authorities and the mission reached an agreement, ad referendum, on economic policies aimed at preserving macroeconomic stability, improving fiscal risk monitoring, strengthening external leeway and strengthening the resilience of the financial sector. . To this end, it was agreed to streamline tax exemptions and strengthen their management framework to improve domestic revenue mobilization.

The authorities estimate that the costs of tax exemption could reach 1.6% of GDP in 2018.

The new funding mechanisms in the 2019 budget will only be used to finance budgeted expenditures. As part of efforts to address the fiscal risks of public enterprises, a supervisory body will be created to monitor and manage the interests of the state in specific public entities.

"Monetary policy should remain cautious and complement fiscal adjustment efforts to control underlying inflationary pressures and avoid surprises on the upside.

"The authorities have shown a strong commitment to financial stability, with the resolution of nine banks over the past two years, which will help improve medium-term economic growth prospects.

The global financial system is sufficiently capitalized and well positioned to support credit growth and future investments. The Bank of Ghana is implementing reform measures to address persistent weaknesses in the financial sector.

"The authorities and the mission discussed risks to the outlook and vulnerabilities arising from exposure to external sources of funding and potential policy slippages. To mitigate these risks, the authorities have redoubled efforts to strengthen external buffers. They have also enacted legislation introducing a tax rule and set up a budget council to support fiscal discipline and preserve the macroeconomic gains achieved over the past two years.

"The IMF's Executive Board is expected to review the seventh and eighth joint reviews of the ECF by the end of March 2019. The completion of these reviews would provide 132.84 million SDRs (approximately USD 188 million), bringing the total disbursements under the program to SDR 664.20 million. ($ 920.58 million)

"The mission wishes to thank the authorities for their warm hospitality and their constructive and rich discussions."