IMF Staff Concludes Visit to Ghana

IMF News, February 10, 2017

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A team from the International Monetary Fund (IMF), led by Joël Toujas-Bernaté, visited Accra from February 6-10, 2017 to take stock of the 2016 economic developments and the outlook for 2017, engage in a dialogue about the new government’s economic plans, and discuss prospects for program engagement with the IMF.
End-of-Mission press releases convey preliminary findings after a visit; the views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.

Estimated economic growth in 2016: 3.6 percent (exceeded target of 3.3 percent).
Inflation: decline has been slower than expected (no numeric headline provided).
Current account deficit: narrowed to 6 ½ percent of GDP, contributing to a small buildup of foreign exchange reserves.

Overall fiscal deficit (on a cash basis) in 2016: deteriorated to an estimated 9 percent of GDP, instead of declining to 5¼ percent of GDP as envisaged under the IMF-supported program.
Causes of fiscal deviation: poor oil and non-oil revenue performance and large expenditure overruns.
Government debt: increased further to close to 74 percent of GDP at end-2016.
Significant public spending commitments bypassed PFM systems were reported.
IMF staff welcome the new government’s intention to conduct a full audit of outstanding obligations, its commitment to transparency, and readiness to take strong remedial actions to ensure the integrity of PFM systems going forward.
Policy measures cited by authorities to support fiscal consolidation:
- Reduce tax exemptions.
- Improve tax compliance.
- Review the widespread earmarking of revenues.

Large financial imbalances of state-owned enterprises in the energy sector need to be addressed with urgency to avoid the buildup of contingent liabilities for the new government.
The IMF welcomes the new government’s commitments to encourage departments and agencies to implement growth-enhancing reforms in a fiscally sustainable manner.

Bank of Ghana’s (BOG) monetary policy: instrumental in mitigating inflationary pressures in 2016.
Adequately tight monetary policy will be important for containing possible further pressures in 2017.
IMF welcomes BOG’s continued roll-out of the Roadmap for the banking sector and looks forward to actions that can:
- Strengthen banks' balance sheets.
- Contribute to a gradual reduction of the level of nonperforming loans.

The new government has expressed its intent to continue with the current program with the IMF.
The mission looks forward to working closely with the new government to design required policies for restoring macroeconomic stability, high and sustainable growth, and job creation.
Program context note:
- At present Ghana has an Extended Credit Facility (ECF) supported by the IMF.
- The arrangement for Ghana is in an amount equivalent to SDR 664.20 million (90 percent of quota or about US$900 million) and was approved on April 3, 2015.

The mission met with H.E. Vice President Dr. Mahamudu Bawumia; Senior Minister Hon. Yaw Osafo-Maafo; Finance Minister Hon. Kenneth Ofori-Atta; Minister of Food and Agriculture Hon. Dr. Owusu Afriyie Akoto; Bank of Ghana Governor Dr. Abdul-Nashiru Issahaku; other senior officials; and Ghana’s development partners.

Press Release No. 17/43 — February 10, 2017 (IMF Staff statement)