Parliament on Thursday approved the Poverty Reduction and Growth Facility (PRGF) credit agreement between the Government of Ghana and the International Monetary Fund (IMF), for the amount of SDR 387 million (US $597 million).
The amount is for the Balance of Payment support over the medium term (July 2009— July 2012) in accordance with article 181 of the Constitution, sections 3 and 7 of the Loans Act, 1970 and Standing Orders of the House.
The facility would support government’s effort to address economic imbalances, shore up international reserves, increase import cover, stabilize the economy and place it on a path of sustained high growth, in order to accelerate the pace of progress towards the Millennium Development Goals and middle income status for Ghana.
The Chairman of the Finance Committee, Mr James Klutse Avedzi, who presented the report, observed that the global financial crisis, has contributed to the immense pressure on the country’s balance of payments since private remittances have slowed down.
He said foreign direct investment had assumed non-encouraging outlook whilst official access to global market financing had become extremely limited.
The Committee observed that reforms under the PRGF would centre on measures to substantially raise revenue to make room for increased poverty–related spending and developmental needs.
It would also strengthen public expenditure management, public sector reforms and finances of the utility companies, particularly the energy sector and use appropriate monetary policy to lower inflation.
Mr Avedzi said the programme would assist government to stabilize the economy and pursue strategies, which would safeguard future growth.
The Committee noted that the assessment of the progress of the implementation of the PRGF would be done through the use of quantitative performance criteria.
Review of the programme would be conducted twice each year.
Mr Avedzi said on the use of the loan facility, the committee was informed that various policy measures as outlined in the 2009 Budget would be implemented to correct the macro- economic imbalances, grow the economy, reduce poverty and ensure that the fiscal deficit target of 9.4 per cent of GDP is achieved.
The term of the loan is 10 years, with a grace period of five years and an interest rate of 0.5 percent.