Press Release: IMF Executive Board Completes First and Second Reviews Under Ghana’s ECF Arrangement and Approves US$119 Million Disbursement
June 9, 2010Press Release No. 10/235
June 9, 2010
The Executive Board of the International Monetary Fund (IMF) approved today the first and second reviews of Ghana’s economic performance under the Extended Credit Facility (ECF) arrangement. The approval will enable Ghana to draw SDR 81.50 million (US$119 million), bringing total disbursements under the arrangement to SDR149.15 million (US$218 million).
In completing the reviews, the Board granted waivers for the nonobservance of the continuous quantitative performance criterion on the contracting or guaranteeing of nonconcessional external debt and the nonobservance of the September 30, 2009 quantitative performance criterion on the overall budget (fiscal) deficit.
The Board approved on July 15 2009 a three-year arrangement under the Poverty Reduction and Growth Facility (PRGF) for Ghana (see Press Release No. 09/465), which was converted into an ECF.
Following the discussion on Ghana’s economic performance, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, made the following statement:
“The Ghanaian authorities have achieved progress in 2009 in reducing inflation and strengthening external performance. While the fiscal deficit was significantly reduced in 2009, revenue shortfalls resulted in the accumulation of new domestic payment arrears.
“Reduction of the budget deficit to 8 percent of GDP in 2010 will require tight controls over spending, including public administration costs, and strengthening revenue mobilization. To safeguard against new domestic payments arrears, the government should stand ready to tighten fiscal policies promptly, if the need arises.
“Looking to 2011–12, the fiscal space created by Ghana’s move to oil producer status will initially be modest, given the need to further reduce the fiscal deficit to a sustainable level and to repay domestic expenditure arrears. It will be important to tailor spending plans to available resources. Equally, the leeway for additional nonconcessional external borrowing is limited, and further steps to strengthen debt management capacity are needed.
“Programs to strengthen public finance management and revenue administration have been launched. Determined implementation will be important for regaining control over the budget and for prudent use of Ghana’s future oil resources. Transparency in managing oil revenues and related spending will be key.
“Steps are being taken to tackle the under-pricing of energy products, including through the recent significant increase in power tariffs and by repaying the accumulated bank debts of the oil refinery. Going forward, it will be important to adhere to the principle of cost recovery energy pricing to avoid new claims on the budget. Close oversight over the banking system also remains warranted,” Mr. Portugal added.