The Executive Board of the International Monetary Fund has completed its second review of the Extended Credit Facility (ECF) arrangement for Ghana and has approved $114.6 million for the country after finding performance to be broadly satisfactory.
The $114.6 million brings total disbursements to about $343.7 million.
Mr Min Zhu, IMF Deputy Managing Director, said Ghana’s implementation performance of the $918 million programme, continues to be “broadly satisfactory but the economic outlook remains difficult with risks tilted to the downside.”
The IMF said while it is encouraging that Ghana’s fiscal consolidation efforts are on track and electricity production capacity is gradually being increased, “a wide range of ambitious reforms” would be needed to sustain gains from fiscal consolidation over the medium term including broadening of the tax base and enhancing tax compliance, and enhancing management of the wage bill and public finances.
On public debt, the IMF said that due to Ghana’s large financing needs and tight financing conditions, government’s medium term debt management strategy is a welcome step but needs to be complemented with efforts to deepen the domestic debt market.
“It is also important to continue to adhere to the domestic arrears clearance plan and avoid incurring new domestic or external arrears”
“To help bring inflation down towards its medium-term target, Bank of Ghana (BoG) should stand ready to further tighten monetary policy if inflationary pressures do not recede as expected. The preparation of an amended Bank of Ghana Act and BoG’s commitment to gradually deepen the foreign exchange market will help make the inflation targeting framework more effective,” the board said on inflation and monetary policy.
The IMF also welcomed the review of Ghana’s banking laws and amendments to the Bank of Ghana Act to improve stability of the financial sector and the inflation targeting framework.
By Emmanuel Odonkor