IMF Staff Concludes Discussions on the Combined Seventh and Eighth Reviews of Ghana’s Extended Credit Facility Program

IMF News, February 22, 2019

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Canonical URL: IMF Staff Concludes Discussions on the Combined Seventh and Eighth Reviews of Ghana’s Extended Credit Facility Program

IMF team led by Ms. Annalisa Fedelino visited Accra from February 12–21, 2019 to conduct discussions for the combined 7th and 8th reviews of Ghana’s economic reform program supported by an Extended Credit Facility.
The program is scheduled to end on April 3, 2019.
The IMF's Executive Board is expected to consider the combined seventh and eighth ECF reviews by end-March 2019.

Real GDP grew by 6.7 percent in the first three quarters of 2018.
Consumer price inflation was 9.0 percent.
The overall fiscal deficit reached 3.7 percent of the rebased GDP (excluding financial sector costs).
The primary surplus (overall budget balance excluding interest costs) was in line with program targets.

Good progress reported in implementing the ECF-supported program.
Six out of nine end-December 2018 quantitative targets under the program were met.
Structural reforms are advancing.

Domestic revenue mobilization should remain a key priority to create fiscal space and reduce public debt.
Authorities should continue implementing tax policy measures, especially tax exemptions and tax compliance measures.
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.
An oversight body will be established to monitor and manage the state’s interests in specified public entities to address fiscal risks from state-owned enterprises.
Monetary policy should continue to remain prudent and complement fiscal adjustment efforts to keep underlying inflationary pressures in check and avoid upside surprises.

The authorities resolved nine banks during the last two years.
The overall financial system is adequately capitalized and well-positioned to support credit growth and investment going forward.
The Bank of Ghana is introducing reform measures to address remaining financial sector weaknesses.
Authorities have shown great commitment to financial stability, which will help improve medium-term prospects for economic growth.

The economy experienced pressures in the second half of 2018 from foreign investor portfolio rebalancing amid a stronger dollar, rising US interest rates, and emerging market volatility, leading to a decline in external buffers.
The authorities discussed risks from exposure to external sources of funding and potential policy slippages.
To mitigate these risks, the authorities have renewed efforts to strengthen external buffers.
Legislation has been enacted that introduces a fiscal rule and a fiscal council has been established to underpin fiscal discipline and preserve macroeconomic gains.

Completion of the combined seventh and eighth reviews would make available SDR 132.84 million (about US$188 million).
This would bring total disbursements under the program to about SDR 664.20 million (US$920.58 million).

IMF Staff Concludes Discussions on the Combined Seventh and Eighth Reviews of Ghana’s Extended Credit Facility Program, February 22, 2019.