The International Monetary Fund (IMF) on Friday said it is working with Ghana’s authorities to address the economic challenges facing the country and to ensure stability in the economy.
The development followed an IMF mission led by Joel Toujas-Bernate, which visited Accra, Ghana from 6-20 November, to discuss the authorities’ economic and financial programme and its possible financial support by the IMF.
According to the Fund’s statement, the mission met with Ghana’s President John Dramani Mahama, Vice President Kwesi Amissah-Arthur, National Development Planning Commission Chair Dr. Kwesi Botchwey, Finance Minister Seth Terkper and Bank of Ghana Governor
“Following discussions held in Washington DC last month, the Ghanaian authorities continued to work on their economic and financial programme to address domestic and external
vulnerabilities,” said Toujas-Bernate.
He went on: “The authorities and the mission made significant progress towards reaching
understandings on strengthened macroeconomic policies, including on a medium-term
fiscal path consistent with ensuring debt sustainability and reducing the external
current account deficit.
“The mission in particular welcomes the government’s 2015 budget, presented to
parliament on Thursday which targets a reduction of the fiscal deficit by 3.5 percentage
points of GDP (on a commitment basis).
“With projected arrears repayments of 1.2 percent of GDP next year, the cash deficit
will be equivalent to 6.5 per cent of GDP in 2015, down from 9.5 per cent in 2014. The
budget includes some important measures to increase revenues, to eliminate distortive
and inefficient energy subsidies, and to contain growth in Ghana’s comparatively
high public wage bill.
“At the same time, the budget allows for maintaining public investment above 5 per
cent of GDP as well as increasing social protection spending targeted at the most
The IMF official said that the mission also welcomed the government’s aim to
implement structural reforms to underpin a sustained consolidation towards a fiscal
deficit objective of 3.5 per cent of GDP by 2017.
According to Toujas-Bernate, reforms will include strengthening public finance
management, reducing tax exemptions, enhancing tax administration and reviewing
the earmarking of revenues for statutory funds.
“Efforts to clean up the payroll and enhance its management have been initiated
and should be pursued swiftly. These efforts, together with the implementation of
appropriate pay and hiring policies, will help further control the wage bill, which
has been a significant source of fiscal risk,” he noted.
“Taken together, these fiscal measures, combined with sound debt management
and actions to further boost the effectiveness of the Bank of Ghana’s inflation
targeting framework should help restore macroeconomic stability.
“The IMF team will continue to support the authorities as they work in the coming
weeks in several areas, including to take concrete steps in cleaning up the payroll,
finalize the remaining details of their medium-term reforms and to seek external
financing assurances from bilateral donors and international institutions,”
The IMF further noted that once this work is completed, a financial arrangement
to support Ghana’s economic programme would be agreed at staff level before
being proposed for the IMF Executive Board’s consideration.