The Executive Board of the International Monetary Fund (IMF) has completed the seventh and eight reviews under the Extended Credit Facility (ECF) supported arrangement for Ghana.

This will make available about US$185.2 million to the economy.

The Executive Board also approved the authorities’ request for a waiver of the nonobservance of a few programme targets.

The three-year arrangement was approved on April 3, 2015 for about US$925.9 million or 180 per cent of quota at the time of approval of the arrangement.

It was extended for an additional year on August 30, 2017 and is to end on April 2, 2019.
The arrangement aimed to restore debt sustainability and macroeconomic stability to foster a return to high growth and job creation, while protecting social spending.

Deputy Managing Director and Acting Chair, Tao Zhang

The Deputy Managing Director and Acting Chair, Tao Zhang, in a statement, said the Government had achieved significant macroeconomic gains over the course of the ECFsupported programme, with rising growth, single digit inflation, fiscal consolidation, and banking sector clean-up.

It said continued macroeconomic adjustment should underpin these improvements, as the 2020 elections approached.

“In a sign of the authorities’ commitment to fiscal consolidation, the end-2018 fiscal targets were met,” the statement said.

However, the statement said sustained fiscal discipline is needed to reduce financing needs and anchor debt dynamics.

As stronger revenue mobilisation was critical, the submission of the Tax Exemption Bill was welcome, but needed to be complemented by efforts to strengthen tax compliance, the statement said.

Fiscal space was, however, needed to support priority programmes, while off-budget expenditures should be avoided.

“Progress on structural reforms needs to be intensified. Plans to improve public financial
management and supervision of state-owned enterprises (SOEs), the establishment of a fiscal council, and the fiscal rule are welcome”.

Stronger monitoring of fiscal operations, including for SOEs, would also help mitigate fiscal risks.

The statement said while debt management had improved, reliance on foreign investors had increased Ghana’s exposure to market sentiment and exchange rate risk.

Debt collateralisation and revenue monetisation should be limited to avoid encumbering revenues.

Planned infrastructure projects should be transparently managed, be consistent with debt sustainability, and ensure value for money.

“While achieving single-digit inflation is commendable, monetary policy should remain vigilant to guard against upside risks to inflation, also stemming from exchange rate
developments,” the statement said.

Rebuilding international reserve buffers, including through careful foreign exchange liquidity management, was welcome and critical to support greater resilience to external shocks.

“The authorities deserve praise for strengthening the banking sector and for resolving nine banks. Completing the financial sector clean-up, as planned, will support the provision of adequate and affordable credit to the economy.

“The Fund congratulates the authorities for successfully completing the ECF supported
programme and stands ready to support Ghana in its quest for economic prosperity”.

The ECF is a lending arrangement that provides sustained programme engagement over the medium to long term in case of protracted balance of payments problems.

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