Ghana makes progress in meeting IMF’s demands for a bailout

Business News of Monday, 9 February 2015


IMF Imfghana

The International Monetary Fund (IMF) has described as good, progress efforts to clean up Ghana’s payroll before a bailout program is finalized.

The IMF Mission on payroll was in Ghana in January to inspect and help Ghana clear the huge number of ghost names on the public payroll.

President John Mahama recently confirmed that government was expecting to finalize agreements with the IMF on a program next month (March) before the end of the first quarter of 2015.

Earlier, the head of Ghana’s delegation negotiating with the IMF, Professor Kwesi Botchwey, confirmed in an exclusive interview with Citi Business News that the program will be finalized before the end of this month (February).

In a Press Briefing, Director of the Communications Department at the International Monetary Fund, Gerry Rice, in Washington D.C. on February 5 said, “I can furthermore say that we believe good progress has been achieved in recent weeks on the plan to clean up the payroll, finalize the remaining details of the government’s medium-term reforms, as well as firm up financing assurances for the possible program.”

Ghana spends more than 60% of tax revenue to fund the wage bill; however, some economists have criticized this as unsustainable and questioned the integrity of the payroll.

According to some economists, the program has stalled because of concerns with Ghana’s bloated payroll and declining price of crude oil and its impact on government projected revenue.

Government reviewed its oil revenue target to 500 million dollars after the 2015 budget pegged targets at 4.2 billion cedis or 3.1 percent of GDP for this year.

Gerry Rice also confirmed there are ongoing discussions for a policy response to the falling price of crude oil on the international market.

“The IMF team and the Ghanaian authorities are also now discussing the policy response needed in view of the recent large decline in oil prices,” he added.

According to the IMF, the program would be agreed at the staff level before being proposed to the Board for consideration.

Gerry Rice said,” The Ghanaian authorities and the IMF team are finalizing the details of the program to support Ghana’s economic program which, as is usual, would be agreed at the staff level before being proposed to our board for consideration.”

Ghana started talks with the IMF in September 2014 for a bailout program, following challenges with its economy.