Business News of Thursday, 13 July 2017
The International Monetary Fund (IMF) has given the latest indication that it would be in Ghana’s interest to secure an extension of the three-year bailout programme.
An IMF spokesperson told this paper in an email conversation that the significant challenges that had bedeviled the programme within the last year justified its extension.
“Following a significant setback in programme implementation last year, making sure that the original program objectives can be achieved will take more time than initially expected,” the spokesperson stated.
Targets of the programme were woefully missed, with a negative primary balance, staggering debt culminating in low growth for the Ghanaian economy.
The statement from the IMF presupposes that if the original objectives of the programme had to be met then it would go beyond the stipulated time.
This comes on account of a long wait for some disclosure on whether or not the deal will see an extension after Ghana failed to meet major targets and a new administration was inaugurated.
In spite of this admission, the Fund maintains that any decision to request for an extension rests with the Ghanaian government.
Government has been tight-lipped on whether or not it would request an extension of the programme, giving room for wild speculations on government’s intentions.
There were earlier reports from government circles in favour of an extension to which the Fund responded “we are not aware of the authorities’ decision to seek an extension to the on-going programme.”
This meant government had formally not informed the Fund of its intentions to seek an extension to the programme.
Analysts say government was being careful about requesting an extension because it was mindful of its election promises and the ambitious initiatives it had promised the electorate in campaigning for the 2016 elections.
This is because for the ruling New Patriotic Party (NPP) , businesses and other identifiable groups such as the Trades Union Congress (TUC), the IMF programme had inflicted untold hardships on Ghanaians, notwithstanding the debilitating effects of a protracted energy crisis and a highly unstable exchange rate system.
The Fund confirmed to this paper its awareness of government’s intentions of requesting for an extension of the programme.
The spokesperson explained that the IMF could extend a programme “at member’s request, if it is needed for completing programme objectives, and such extensions are not unusual in our program engagements.”
The Fund stressed that “Ghana is an IMF member and we will continue to support Ghana through continued policy dialogue, technical assistance and capacity development, regardless of the authorities’ decision on program extension.”
It is instructive to recall that in May this year, Mr Gerry Rice of the Fund’s Communications Department indicated in a press briefing in New York that there were discussions with the Ghanaian government towards an extension of the programme.
“We have discussed with the authorities the possibility of extending the program, and they have been considering it,” he said on May 25, 2017.
According to Mr Rice, progress had been made in discussions with Ghana over preparations for the fourth review which has been delayed due to the major setbacks in programme objectives.
“This would allow us to present the review to the Board in late July,” he added.
Mr Rice said progress had been made in discussions with the new government towards that the Fourth Review to support Ghana, and “these discussions have helped us better understand the government’s new policies.”
According to him, the Fund was still working toward a common understanding of the implications of the new policies, and how they align with the objectives of the programme.
A key priority is to bring the public-sector debt on a clearly declining path.
So, we welcome this ongoing dialogue with the authorities and look forward to completing the discussions over the coming weeks.
On the specific questions, we have discussed with the authorities the possibility of extending the program and any extension that would of course have to be requested by the Ghanaian authorities, and we understand they are considering the matter, and that’s where it stands.