Prof Kwesi Botchwey,
Chairman of the National Development Planning Commission (NDPC), will today lead a team of government officials to a meeting with an IMF delegation in Accra to see how best Ghana’s economic problems could be resolved.
Though analysts have indicated that the engagement with the IMF would come at great cost, government has no choice than to negotiate for favourable terms.
It would be recalled that in its May country report, the IMF recommended a list of short-term adjustment measures for government.
Some of these included a larger and more frontloaded fiscal consolidation given the country’s ballooning fiscal and external balances.
It further insisted on higher taxes and spending cuts to check government’s budget deficit promptly.
Additionally, it proposed high ad valorem tax or VAT on fuel; upward adjustment in excise taxes, higher taxes on real-estate, a freeze on new tax exemptions and vigorous assessment of large taxpayers.
In order to help streamline government expenditure, it proposed streamlining allowances to reduce the wage bill, a down-sizing of the public sector workers through a reduction in overstaffed areas.
It also called for a decrease or elimination of oil-revenue transfers to the Ghana National Petroleum Corporation (GNPC).
The Bretton Woods institution also proposed the reduction of the development budget.
According to the IMF, such additional procedures would control government borrowing and cause the budget deficit to contract to 8.5 percent
of GDP in 2014; 6.3 percent in 2015 and a more sustainable 4.5 percent of GDP in 2016.
The IMF economic stabilization plan is expected to span a period of two years.
Some analysts expect the Ghana cedi to stabilize with the IMF’s bailout plan, but others believe the measures cannot address the country’s challenges.
BY Samuel Boadi
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