## IMF Survey : IMF Readies Loan for Ghana to Support Reform Plan

_IMF News, February 26, 2015_

## Source details

**Canonical URL:** [IMF Survey : IMF Readies Loan for Ghana to Support Reform Plan](https://www.imf.org/en/news/articles/2015/09/28/04/53/socar022615a)

## Other formats

- [Markdown version](/en/news/articles/2015/09/28/04/53/socar022615a/index.md)
- [Structured JSON version](/en/news/articles/2015/09/28/04/53/socar022615a/index.json)
- [Bundle manifest](/en/news/articles/2015/09/28/04/53/socar022615a/bundle-manifest.json)

## Bibliographic details
- Published: February 26, 2015

---

### Program agreement and financing
- IMF staff team in Ghana reached agreement with the government on a new economic reform program.
- The program would be supported by an IMF loan of about $940 million.
- The loan could receive final approval in early April.
- Ghana would implement the reform program under a three-year Extended Credit Facility arrangement, subject to approval by the IMF’s management and Executive Board.
- One priority of the program is to restore debt sustainability through sustained fiscal consolidation.

### Economic context and shocks
- Offshore oil production came on stream in Ghana in 2010; the slump in world oil prices since mid-2014 resulted in a shortfall of budget revenue of about 2 percent of GDP.
- The government acted to buttress the 2015 budget with additional measures to lower spending ceilings and draw from an oil stabilization fund to offset the oil revenue shortfall.
- Ghana entered the global capital market for the first time in September 2007.
- Growth topped 9 percent in 2011 but was followed by three difficult years with slowing activity, accelerating inflation, and rising debt levels and financial vulnerabilities.
- In 2014 economic growth reached its lowest level in many years amid high interest rates, a fast depreciating currency, low aggregate demand, and a deepening energy crisis.
- Inflation reached 17 percent, well above the central bank’s inflation target.

### Short-term outlook and projections
- Ghana’s economic growth rate is expected to slow for a fourth consecutive year in 2015 to 3 ½ percent on the back of a severe energy crisis and the budget-tightening measures.
- The program expects growth to rebound over the medium term on account of an improved macroeconomic environment and cost effective solutions to address the energy crisis.
- Inflation should decelerate substantially.
- Stronger fiscal consolidation is expected to stabilize the debt ratio to GDP.
- The external current account deficit is projected to decline, which, together with increased donor support, should contribute to start rebuilding reserves.

### Program pillars and key policy actions
- The program rests on three pillars:
  - Restraining and prioritizing public expenditure with a transparent budget process;
  - Increasing tax collection; and
  - Strengthening the effectiveness of the central bank monetary policy.
- The program explicitly accommodates for the expansion and the safeguard of priority spending, in particular social protection programs.

### Fiscal measures, transparency, and institutions
- Key reforms include improving transparency in the budget process to prioritize spending, enhancing revenue mobilization, and strengthening fiscal institutions, including through the review of possible fiscal rules.
- Reviewing fiscal rules has been a focus of ongoing discussions between the Ghanaian authorities and civil society, which is concerned about fiscal transparency in the budget process.
- To strengthen control on the wage bill and address payroll irregularities, the government has started to:
  - Detect and remove ghost workers;
  - Secure and unify payroll databases; and
  - Sanction those responsible for fraud.
- Additional measures include strict control on new hiring and reduction in the number of public service agencies to help contain the wage bill.
- Tax administration reforms are under way, and the government initiated a review of existing tax exemptions with a view to reducing them.
- Public debt management will continue to be strengthened to ensure financing needs and payment obligations are met at the lowest possible cost, consistent with a prudent degree of risk.

*IMF Survey, February 26, 2015.*

---


## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Country Focus](https://www.imf.org/en/news/country-focus)
- [Press release](http://www.imf.org/external/np/sec/pr/2015/pr1576.htm)
- [Ghana and the IMF](http://www.imf.org/external/country/gha/index.htm)
- [Sustain Africa’s growth](http://www.imf.org/external/pubs/ft/survey/so/2014/car101114a.htm)
- [Path to higher-income status](http://www.imf.org/external/pubs/ft/survey/so/2014/car121614a.htm)
- [Tap experience of peers](http://www.imf.org/external/pubs/ft/survey/so/2015/car020215a.htm)
- [Africa’s frontier emerging markets](http://www.imf.org/external/pubs/ft/fandd/2008/09/nellor.htm)
- [September 2007](http://www.imf.org/external/pubs/ft/fandd/2008/09/ahmed.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar022615a_