Press Release No. 02/8

The Executive Board of the International Monetary Fund (IMF) today reviewed two noncomplying disbursements to Ghana of SDR 26.752 million (about US$33 million) and SDR 52.58 million (about US$65 million) under its three-year Poverty Reduction and Growth Facility (PRGF) arrangement. These disbursements had been made in September 2000 and July 2001, respectively. In October 2001, the new Ghanaian authorities informed the Fund of an upward revision to data on the stock of reserve money, with the implication that the information available to the Fund at the time of approval of the September 2000 and July 2001 disbursements was incorrect. In the course of subsequent analysis to reconcile reserve money and other monetary data with underlying accounts of the Bank of Ghana, it was determined that the stock of short-term external debt contracted or guaranteed by the government or the Bank of Ghana had also been underreported. As a result of these inaccuracies in the information provided earlier, which led to deviations from the agreed program which were not temporary or minor, the September 2000 and July 2001 disbursements were deemed to be noncomplying. The September 2000 disbursement had, however, already been repaid due to previous misreporting problems (see Press Release No. 01/32), and hence no further corrective action with respect to this disbursement was needed. With respect to the July 2001 disbursement, the Executive Board granted waivers for the two performance criteria that had not been observed.¹

Following the Executive Board's discussion on this matter, Eduardo Aninat, Deputy Managing Director and Acting Chairman, stated:

"The Executive Board regretted that inaccurate monetary data had been reported to the IMF. The Board noted, however that the revised data had been provided promptly to the IMF at the initiative of the new authorities. The Bank of Ghana has since taken concrete steps to prevent future occurrences of misreporting of monetary data. These include the development and implementation of an automated system linking the preparation of its monetary survey data to the underlying accounts of the Bank of Ghana and reports from commercial banks. The Bank of Ghana has also commissioned a firm of international standing to conduct a full audit of its financial accounts.

"The Executive Board welcomed the new Ghanaian authorities' commitment to transparency and to a strengthening of Ghana's data systems, and noted that many of the recommendations from a recent IMF technical assistance mission in this area had already been implemented. The Board agreed that, although the deviation with respect to the previous program target for reserve money was significant, the authorities had taken sufficiently strong corrective actions to preserve the objectives of their PRGF-supported program. In particular, monetary policy had been tightened significantly since the beginning of 2001, sharply reducing the pace of reserve money expansion and consumer price inflation. The Board emphasized the importance of correcting the deficiencies that led to misreporting, and urged the authorities to take advantage of Fund technical assistance to increase institutional capacity in these areas.

"With regard to the underreporting of short-term external debt, the Board concluded that this had not led to a misrepresentation of the Bank of Ghana's net international reserve position, since gross reserve assets and liabilities had both been understated by equal amounts, and hence the underlying objectives of the program had not been jeopardized.

"As a result of these considerations, the Executive Board decided to grant waivers for the nonobservance of the two relevant quantitative performance criteria at the end-August 2000 test date, contingent on the accuracy of the newly provided data," Mr. Aninat said.

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¹ The Executive Board decision is in the context of the strengthened safeguards adopted in April 2000 on the use of IMF financial resources (see PIN No. 00/28).