An IMF team led by Annalisa Fedelino, visited Accra from September
17-27, 2018, to conduct the seventh review of Ghana’s economic program
supported by the Extended Credit Facility (ECF). The discussions
focused on recent developments, fiscal and monetary policies, and
program implementation.
At the end of the mission, Ms. Fedelino released the following statement:
“Growth prospects remain strong, supported by robust oil and cocoa
production. Inflation has remained in single-digits. S&P upgraded
Ghana's ratings from B- to B with a stable outlook in September 2018. The
government continues to step up efforts to address financial sector
vulnerabilities, with the recent purchase and assumption of five banks.
However, Ghana has been affected by the volatile environment for emerging
and frontiers markets, which has exerted pressure on the currency resulting
in cedi depreciation.
“Program performance has been affected by external and domestic factors.
Available fiscal data through end-July point to much expenditure
front-loading on goods and services and lower-than-programmed revenue,
especially VAT and import duty. On this basis, achieving end-December
fiscal targets hinges on strengthening both expenditure discipline and tax
compliance, beyond measures adopted in the mid-year budget review. The authorities remain strongly committed to the program targets. The
2019 budget would need to address persistent revenue shortfalls and
start tackling decisively the issue of exemptions.
Continued progress on fiscal structural reforms—particularly on public
financial management and oversight over state-owned enterprises—is
instrumental to anchor expenditure control and lasting fiscal discipline.
Access to new financing arrangements and longer-term debt instruments would
help fund Ghana’s pressing development and infrastructure needs; such
arrangements would need to be implemented transparently, deliver value for
money, and be consistent with debt sustainability considerations.
“Continued prudence on the monetary policy easing cycle is welcome and
inflation is expected to remain within the target bands until the end of
the year. Recent exchange rate pressures reinforce the call for fiscal
discipline. Going forward, improved communication and coordination would
help foster deeper and more liquid FX market.
“Recent bank resolutions underscore the authorities’ commitment to
financial stability and will help improve medium-term prospects for
economic growth. While costly for Ghanaians taxpayers, they are nonetheless
necessary to address long-standing weaknesses and create a resilient
financial system, improved access to credit and financial inclusion. The
overall financial system is adequately capitalized, but weaknesses in some
institutions—including high levels of nonperforming loans—can adversely
impact financial stability, hamper credit growth and investment, and create
contingent liabilities for the government. The Bank of Ghana (BoG) is
introducing reform measures to address remaining financial sector
weaknesses with the view of improving the availability and affordability of
credit to the private sector.
“The mission met with Vice President Mahamudu Bawumia; Finance Minister Ken
Ofori-Atta; Deputy Ministers’ Charles Adu Boahen; Kwaku Kwarteng; and Abena
Osei Asare; Governor Addison of the BoG as well as First and Second Deputy
Governors Maxwell Opoku-Afari and Elsie Addo Awadzi; and other senior
officials. The IMF team is grateful to the authorities for constructive
discussions and collaboration. Discussions will continue in Washington DC,
including on the impact of the rebased GDP to be soon released; and on the
2019 budget and reforms in the pipeline.”
