Before the programme ends by December 2017, the in-coming government of the New Patriotic Party (NPP) has given the strongest indication of renegotiating aspects of Ghana’s bailout programme with the International Monetary Fund (IMF).
The Party’s spokesperson on Finance and former Deputy Finance Minister under erstwhile Kufour’s government, Dr Anthony Akoto Osei who spoke to Business Finder recalled pronouncements from the President Elect Nana Addo Dankwa Akufo Addo that
He would review the IMF programme and all other programmes that would need to be reviewed.”
Even though Dr Osei could not pinpoint specific aspects of the three-year programme which would undergo changes, analysts are confident that the new government would seek more effective ways of reducing the budget deficit which could be heading reach 9 per cent, 3 per cent higher than what was projected under the IMF programme.
The NPP administration would also seek more effective ways of reducing the country’s public debt which has reached GH¢112billion as at September 2016.
The Party has seen the fiscal consolidation programme as being too severe with its stinging effect on Ghanaians and businesses.
The public financial management law which is one of the pillars of the IMF programme will also be reviewed since according to the party it is too weak to guarantee the required fiscal prudence in government.
The Bank of Ghana (BoG) in its bid to arrest inflation has for almost two years maintained an extremely tight monetary policy in tandem with the dictates of the Fund’s programme, with its devastating toll on businesses.
The Fund in its third review of the programme revealed that growth in credit to Ghana’s private sector declined sharply in the first half of 2016, from 33 per cent in 2015 to 9 per cent.
The Fund further disclosed that the average lending rate of banks in Ghana increased from 28 per cent to 33 per cent, “signaling a tightening in credit conditions.”
Analysts say the drastic reduction in credit to the private sector is the direct result of the deliberate policy of the BoG’s tight monetary policy aimed at reducing liquidity with the view to stabilizing inflation and the exchange rate.
The BoG’s high policy rate has been a disincentive to the growth of businesses and industry at large.
According to Dr Raziel Obeng–Okon, industry thrives on lower interest rates, reasonable taxes, good flow of power and stable macro-economic environment.
“These indicators have gone against industry for some time now and impacted negatively on our GDP,” he said.
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