An International Monetary Fund (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 mission 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.
At the end of the mission in Accra, Ms. Fedelino issued the following
statement:
“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 authorities have shown great commitment to financial stability with
the resolution of nine banks during the last two years which will help
improve medium-term prospects for economic growth. 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.
“The authorities and the mission discussed risks to the outlook and
vulnerabilities stemming from exposure to external sources of funding and
potential policy slippages. To mitigate these risks, the authorities have
renewed efforts to strengthen external buffers. They have also enacted
legislation that introduces a fiscal rule and have established a fiscal
council to underpin fiscal discipline and preserve macroeconomic gains made
in the last two years.
“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).
“The mission wishes to thank the authorities for their warm hospitality and
constructive and rich discussions.”
