A team from the International Monetary Fund (IMF), led by Joël
Toujas-Bernaté, visited Accra from February 6-10, 2017 to take stock of the
2016 economic developments and the outlook for 2017, engage in a dialogue
about the new government’s economic plans, and discuss prospects for
program engagement with the IMF.
[1]
Mr. Toujas-Bernaté released the following statement at the end of the
visit:
“Ghana’s economy continues to face challenges. While the estimated economic
growth of 3.6% in 2016 exceeded our target of 3.3%, the decline in
inflation has been slower than expected. The current account deficit
narrowed to 6 ½ percent of GDP, contributing to a small buildup of foreign
exchange reserves.
“In 2016, the overall fiscal deficit (on a cash basis) deteriorated to an
estimated 9 percent of GDP, instead of declining to 5¼ percent of GDP as
envisaged under the IMF-supported program. The large deviation was mainly
due to poor oil and non-oil revenue performance and large expenditure
overruns. As a result, the government debt-to GDP ratio increased further
to close to 74 percent of GDP at end-2016.
“The new government has expressed its intent to continue with the current
program with the IMF. Officials outlined bold policies to restore fiscal
discipline and debt sustainability and also to support growth and private
sector development. 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.
“Significant public spending commitments that bypassed public finance
management (PFM) systems were reported. 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 large financial imbalances of state-owned enterprises in the energy
sector also need to be addressed with urgency to avoid the buildup of
contingent liabilities for the new government. We welcome the new
government’s commitments to encourage its departments and agencies to
implement growth-enhancing reforms in a fiscally sustainable manner.
“Bank of Ghana’s (BOG) monetary policy has been instrumental in mitigating
inflationary pressures in 2016. Adequately tight monetary policy will again
be important for containing possible further pressures in 2017. We welcome
BOG’s continued roll-out of the Roadmap for the banking sector and look
forward to the actions that can strengthen banks' balance sheets and
contribute to a gradual reduction of the level of nonperforming loans.
“We look forward to working closely with the new government in their
efforts to design the required policies for restoring macroeconomic
stability, high and sustainable growth and job creation.”
The mission met with H.E. 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.
[1]
At present Ghana has an
Extended Credit Facility
(ECF) supported by the IMF. The ECF is a lending arrangement that
provides sustained program engagement over the medium to long term
in case of protracted balance of payments problems. The arrangement
for Ghana in an amount equivalent to SDR 664.20 million (90 percent
of quota or about US$900 million) was approved on April 3, 2015
(see
Press Release No.15/159
).
