International Monetary Fund (IMF) Staff met with the Ghanaian government delegations on from February 12-21, 2019 to discuss the combined Seventh and Eight Reviews of Ghana’s Extended Credit Facility Program.
The IMF team led by Ms. Annalisa Fedelino met with Vice President Mahamudu Bawumia, Finance Minister Ken Ofori-Atta, Bank of Ghana Governor Ernest Addison, other senior officials, as well as representatives of the private sector, civil society, and development partners.
A statement issued by the IMF stated, “Domestic revenue mobilization should remain a key priority to create fiscal space and reduce public debt. The authorities should continue efforts at implementing tax policy measures, especially tax exemptions and tax compliance measures.”
On her part the IMF team leader, Ms. Annalisa Fedelino said, “Ghana’s recent economic performance has been favorable despite a less supportive external environment for frontier economies. Real GDP grew by 6.7 percent in the first three quarters of 2018. Over the medium term, growth is projected to remain sustained, buttressed by recent oil discoveries. Consumer price inflation, now at 9.0 percent, is well within the band around the inflation target. The overall fiscal deficit reached 3.7 percent of the rebased GDP (excluding financial sector costs), and the primary surplus (overall budget balance excluding interest costs), was in line with program targets. At the same time, the economy experienced some pressures in the second half of 2018, largely emanating from foreign investors rebalancing their portfolios in the context of a stronger dollar, rising US interest rates, and volatility in emerging markets, which led to a decline in external buffers.
“Good progress has been made in implementing the ECF-supported program, which will end on April 3, 2019 as envisaged. Six out of nine end-December 2018 quantitative targets under the program were met and structural reforms are advancing.
“The Ghanaian authorities and the mission reached understandings, ad referendum, on economic policies aimed at safeguarding macroeconomic stability, improving monitoring of fiscal risks, strengthening external buffers, and enhancing the resilience of the financial sector. To this end, it was agreed that tax exemptions will be rationalized, and their management framework strengthened to improve domestic revenue mobilization. The authorities estimate tax exemption costs to be as much as 1.6 percent of GDP in 2018. New financing schemes in the 2019 budget will be solely used to fund budgeted spending. As part of efforts to address fiscal risks from state-owned enterprises, an oversight body will be established to monitor and manage the state’s interests in specified public entities.
“Monetary policy should continue to remain prudent and complement fiscal adjustment efforts to keep underlying inflationary pressures in check and avoid upside surprises.
“The IMF’s Executive Board is expected to consider the combined seventh and eighth ECF reviews by end-March 2019. Completion of these reviews would make available SDR 132.84 million (about US$188 million), bringing total disbursements under the program to about SDR 664.20 million (US$920.58 million).
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Credit: IMF
