The International Monetary Fund(IMF) has told Citi Business News government has assured the fund of its commitment to implement the ECF programme and achieve stability despite the resignation of the governor of the Bank of Ghana, Dr. Abdul Nashiru-Issahaku.
Responding to queries sent by Citi Business News, an IMF spokesperson Andrew Kanyegirire said the “They have assured us of their commitment to continue implementing the current programme and to maintain macroeconomic stability for all Ghanaians”.
The former governor, whose tenure of office was protected by law but resigned was a key member of the government economic team that met previous IMF review teams.
President Akufo-Addo yesterday appointed a new governor of the Bank of Ghana, Dr. Ernest Addison.
Apart from supervising the monetary policies of the central bank, Dr. Addison will also join the government economic team to help meet the conditionalities set by the fund.
One of the conditions is zero financing from the central bank even though there is a window of opportunity for the government to access 5 percent budget deficit financing from the Bank of Ghana.
In responding to the queries, the IMF also stated that Ghana is a key member of the IMF and that we have a good working relationship with the authorities.
Gov’t announced review
During his appearance at Parliament’s Appointment Committee, the Senior Minister Yaw Osafo-Maafo stated that government will make some recommendations on the conditions set by the IMF.
One the conditions set by the fund was zero financing from the central government, which was rejected by lawmakers in 2016 during the review of the Bank of Ghana Act.
However the previous government by principle went ahead to implement zero financing from the Bank of Ghana.
Mr. Osafo-Maafo however hinted that government may access financing from the central bank since it requires fiscal space.
According to Mr. Osafo-Maafo, the IMF agreement did not go before parliament hence does not have any legal binding on government.
Finance Minister expressed hope in IMF
During the IMF visit, Finance Minister, Ken Ofori-Atta described the meeting as fruitful since some common grounds were reached during the initial discussions.
Mr. Ofori –Atta assured that government is committed to complenting the programme with the fund.
IMF lauds NPP’s tax cut policy
The International Monetary Fund (IMF) was confident the plans outlined by the NPP government to cut down and eliminate some taxes will restore fiscal discipline, promote debt sustainability and support private sector development.
The fund argued that such decisions should also help reduce the large fiscal slippages observed last year.
A statement released by the visiting IMF team whose meeting ended on [February 10, 2017], however, indicated that Ghana’s economy continues to face challenges.
According to the team, though the country’s 2016 estimated economic growth of 3.6% exceeded the Fund’s target of 3.3%, the decline in inflation has been slower than expected.
“The large fiscal slippages observed last year will, indeed, require strong efforts of fiscal consolidation to support debt sustainability. The new government’s intentions to reduce tax exemptions, improve tax compliance and review the widespread earmarking of revenues should help in this regard.”
“We welcome the new government’s intention to conduct a full audit of outstanding obligations, its commitment to transparency and its readiness to take strong remedial actions to ensure the integrity of the PFM systems going forward,” the statement by the visiting team added.
The team led by Toujas-Bernaté met with Vice President Dr. Mahamudu Bawumia; Senior Minister Hon. Yaw Osafo-Maafo; Finance Minister Hon. Kenneth Ofori-Atta; Minister of Food and Agriculture Hon. Dr. Owusu Afriyie Akoto; Bank of Ghana Governor Dr. Abdul-Nashiru Issahaku; other senior officials; and Ghana’s development partners.
The IMF programme
Ghana in 2015 signed onto a 918 million dollar extended credit facility programme with the fund.
Ghana has so far received a total of about US$464.6 million as disbursements from the IMF. The latest was on September 28, 2016.
The programme aims to restore debt sustainability and macroeconomic stability in the country to foster a return to high growth and job creation, while protecting social spending.
The deal which was not approved by Parliament has been heavily criticized by the new government, raising concerns that it will be reviewed under their tenure.
Calls for the renegotiation of the deal however have attracted mixed reactions from economists.