Ken Ofori Atta
Ghana is set to receive an amount of SDR 13.84 million, equivalent to $185.2 million, from the International Monetary Fund (IMF).
The SDR is an international reserve asset created by the IMF in 1969 to supplement the official reserves of its member countries.
The value of the SDR is based on a basket of five currencies—the U.S. dollar, Euro, Chinese Renminbi, Japanese Yen and the British Pound Sterling.
The announcement was made after the Executive Board of the IMF completed the seventh and eight reviews under the Extended Credit Facility (ECF) support arrangement with Ghana.
DAILY GUIDE understands that the final review was done on Wednesday, March 20.
In a release, IMF said, “Considering the authorities’ resolve to tackle difficult reforms, the Executive Board also approved the authorities’ request for a waiver of the non-observance of a few programme targets.”
It said, “Ghana’s three-year arrangement was approved on April 3, 2015, for SDR 664.20 million (about US$925.9 million or 180 per cent of quota at the time of approval of the arrangement). It was extended for additional year on August 30, 2017 and is to end on April 2, 2019.”
According to the release, “The arrangement aimed to restore debt sustainability and macroeconomic stability in the country to foster a return to high growth and job creation, while protecting social spending.”
Tao Zhang, Deputy Managing Director and Acting Chair, is quoted in the release as saying “the authorities have achieved significant macroeconomic gains over the course of the ECF-supported programme, with rising growth, single digit inflation, fiscal consolidation and banking sector clean-up. Continued macroeconomic adjustment should underpin these improvements, as the 2020 elections approach.”
“In a sign of the authorities’ commitment to fiscal consolidation, the end-2018 fiscal targets were met. Sustained fiscal discipline is needed to reduce financing needs and anchor debt dynamics. As stronger revenue mobilization is critical, the submission of the tax exemption bill is welcome, but needs to be complemented by efforts to strengthen tax compliance. Fiscal space is needed to support priority programmes, while off-budget expenditures should be avoided,” the release said.
“Progress on structural reforms needs to be intensified. Plans to improve public financial management and supervision of state-owned enterprises (SOEs), the establishment of a fiscal council and the fiscal rule are welcome. Stronger monitoring of fiscal operations, including for SOEs, will help mitigate fiscal risks.
“Debt management has improved, though reliance on foreign investors has increased Ghana’s exposure to market sentiment and exchange rate risk. Debt collateralization and revenue monetization should be limited to avoid encumbering revenues. Planned infrastructure projects should be transparently managed, be consistent with debt sustainability and ensure value for money,” it added.
It, however, observed that while achieving single-digit inflation is commendable, monetary policy committee should remain vigilant to guard against upside risks to inflation and also stem exchange rate developments.
By Melvin Tarlue