Ghana: Request for a Three-Year Arrangement Under the Extended Credit Facility
IMF Staff Country Reports, April 21, 2015
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Bibliographic details
- Published: April 21, 2015
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484328255.002
Executive summary — Context and macroeconomic background
- Emergence of large fiscal and external imbalances in recent years led to a slowdown in growth and is putting Ghana’s medium-term prospects at risk.
- Government efforts to achieve fiscal consolidation since mid-2013 were undermined by policy slippages, external shocks and rising interest cost.
- Until mid-2014:
- net international reserves position had further weakened,
- the exchange rate depreciated sharply,
- these developments fueled inflationary pressures.
- Stabilization factors:
- Eurobond issued in September (year not specified in the summary),
- a short-term loan contracted by the Cocoa Board.
- Despite stabilization, public debt continued to rise at an unsustainable pace.
Extended Credit Facility (ECF) request
- The Ghanaian authorities requested a three-year arrangement under the ECF in an amount of SDR 664.20 million (180 percent of quota) in support of their medium-term economic reform program.
Program framework — objectives and focal areas
- Program anchor:
- The authorities’ three year ECF-supported program is anchored on the second Ghana Shared Growth and Development Agenda (GSGDA II).
- Program aims:
- restore debt sustainability through a sizeable and frontloaded fiscal adjustment,
- rebuild external buffers,
- eliminate fiscal dominance of monetary policy,
- safeguard financial sector stability.
- Key program focus areas:
- Substantially strengthen the fiscal position by:
- mobilizing additional revenues,
- restraining the wage bill and other primary spending,
- making space for priority spending.
- Government is taking additional adjustment measures to help offset lower-than-budgeted oil revenue.
- A prudent borrowing policy will complement fiscal consolidation efforts to restore debt sustainability.
- Accelerate the reform agenda by:
- strengthening public financial management and expenditure controls, in particular cleaning-up the payroll and enhancing wage bill control,
- improving revenue collection through tax policy and tax administration reforms,
- restoring the effectiveness of the inflation-targeting (IT) framework by eliminating fiscal dominance and enhancing monetary policy operations.
Risks to the program
- Identified risks include:
- delayed or partial implementation of policies, including next year in the run-up to elections,
- a slower growth recovery if the electricity crisis is not addressed quickly,
- additional negative commodity price shocks.
Staff position
- IMF staff supports the authorities’ request for IMF support.
- Emphasis: Forceful and sustained implementation of the program will be essential to address macroeconomic imbalances.
Publication and metadata (as reported on the landing page)
- Publication title: Ghana: Request for a Three-Year Arrangement Under the Extended Credit Facility
- Date on page: April 21, 2015
- Series: Country Report No. 2015/103
- Issue: 103
- Volume: 2015
- Pages: 125
- DOI: https://doi.org/10.5089/9781484328255.002
- Stock No: 1GHAEA2015001
- ISBN: 9781484328255
- ISSN: 1934-7685
- Subjects: Expenditure, External debt, Labor, Public debt, Public financial management (PFM), Wages
- Keywords: central bank financing, CR, creating flow, debt, deficit, financing, GDP, Global, headline CPI inflation, inflation expectation, ISCR, sovereign bond commitment, Sub-Saharan Africa, sustainability analysis, transformation objective, Wages
Source: "Ghana: Request for a Three-Year Arrangement Under the Extended Credit Facility", IMF Staff Country Reports 2015, 103 (2015), landing page content.