Gov�t Begins Negotiations To extend IMF Deal

Government is considering extending Ghana’s program with the International Monetary Fund(IMF).

Minister of Monitoring and Evaluation, Dr. Anthony Akoto Osei who confirmed the move to Citi Business News said Government is seeking to extend the Extended Credit Facility program with the IMF to December 2018.

According to him, even though the extension has not been finalized by both parties, discussions are underway on the matter which featured heavily on the agenda during a visit by the IMF assessment team to Ghana last week.

Ghana entered into a three year program with the IMF on April, 2015 for a total amount 918 million US dollars which was expected to be disbursed in eight equal tranches.

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.

There were earlier assertions that the IMF would insist on the conditions and extend the duration for the programme for the Nana Akufo Addo government.

Dr. Akoto Osei however stated that the request for extension was rather raised by the Government Economic Team during deliberations.

“IMF on its own cannot do that [extension of the programme] , that must be negotiated with Ghana. They have discussed it but nothing has been signed yet,” he said.

Dr. Akoto Osei explained that initial assessment by the economic team may point to the fact that more time would be required to fully implement and achieve the targets.

“Originally the programme was expected to end on April, 2018 but I know they are discussing extending it to December 2018 that may be coming at the request of government not the IMF. They can’t do that.  The time is too short for now. So the government thought that it may be useful to end in December rather than in April,” he said.

“That is a proposal until the mission that came to do the assessment come back to government. Once they discuss it  then there will be another meeting  to formally make the request. The government has discussed that possibility with the IMF but nothing has been signed yet,” he stressed.

Govt 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.