Just like the Ameri Power Deal, Ghana’s IMF Deal is counted among the major controversial contracts inherited by the new Akufo-Addo government from the immediate past Mahama administration.
The NPP government has also described it as one of the stumbling blocks on their pathway to achieving their major goal of improving Ghana’s economy.
Deal Extension – Facts You Should Know
Despite the fact the the akufo-Addo administration earlier said they have no intention of extending Ghana’s IMF Deal, news broke yesterday, August 30, that the programme has been extended by one year, following IMF’s completion of the fourth Extended Credit Facility(ECF) Review.
The development which was reported by JoyBusiness has it that, “IMF Executive Board today, completed the fourth review of the arrangement under the Extended Credit facility”.
“The Board also approved Ghana’s request for waivers of non-observance of performance criteria, and modification of one performance criterion; and the extension of the arrangement by one year,” a statement from the IMF reads.
The Board also approved Ghana’s request for their non-observance of performance criteria and modification of one performance criterion to be waived.
This simply means that the IMF programme is now expected to be completed in the first quarter of 2019.
The addition of an extra one year to the IMF deal brings about a disbursement of $94.2m, bringing the total disbursements under the program to $565.2 million, with the remainder being tied to the remaining reviews, the IMF Executive Board revealed.
Economic Strengths/Weaknesses – What IMF Says
The Executive Board of the International Monetary Fund (IMF), pointed out the following areas of strengths and weaknesses in the present administration:
The IMF revealed that Ghana’s economy is showing signs of recovery owing to the new government’s commitment to “macroeconomic stability, fiscal discipline, and an ambitious reform agenda”; adding that “decisive implementation of these policies and reforms would allow Ghana to reap its economic potential and achieve higher and more inclusive growth rates”.
The board promised to support the government’s efforts through the continued implementation of the ECF programme. They were however quick to note that additional efforts such as a careful fiscal management and expenditure control measures must be implemented in order to “achieve the 2017 program targets and reverse the unfavorable debt dynamics”.
IMF Executive Board of Directors commended the progress made in the strengthening the banking system, in particular through the approval of time-bound recapitalization plans for undercapitalized banks and the recent resolution of two insolvent banks.
They however, called for further steps to strengthen the supervisory and regulatory framework to address liquidity risks and rising levels of NPLs. Directors also encouraged action to further strengthen the AML/CFT framework.
The Board welcomed the deceleration in inflation and encouraged the Bank of Ghana (BoG) to remain vigilant and take action to bring it back to target. They also called for measures to further strengthen the credibility of the inflation targeting framework, which would benefit from efforts in the development of the foreign exchange market and continuation of BoG’s policy on zero financing of the government.
IMF Directors emphasized the need to tackle energy sector inefficiencies, particularly improving the management of the state‑owned enterprises (SOEs). They also advised that ongoing debt restructuring efforts are helpful but are no substitute to stemming the SOEs’ financial losses.
Ghana’s IMF Deal
The government of Ghana, under the leadership of former President John Mahama, signed a three-year Extended Credit Facility (ECF) Programme worth nine hundred and eighteen million US Dollar ($918m) with the International Monetary Fund (IMF), on 3rd April, 2015.
The deal which is supposed to end in April, 2018, imposes strict targets for revenue collection and spending, and is mainly targeted at reducing inflation, public debt and budget deficit; facilitating high economic growth and job creation through agriculture and infrastructure investment.
Following the takeover of power by the New Patriotic Party (NPP) in January, there were claims that the new government will abandon the IMF Deal. But the incumbent Finance Minister, Ken Ofori Atta during his presentation of the 2017 Budget in March, debunked such claims, saying that government will do all within their powers to see to the completion of the deal.
The Finance Minister who disclosed that virtually none of the targets of the IMF Deal are being met as supposed, said there is a dire need to review the programme. He had further disclosed that government will meet with necessary staff of the International Monetary Fund to see how the deal could be reviewed for improved results.
Although the government is yet to make a statement on the extension of Ghana’s IMF Deal, it is believed that the extension is a product of the government’s negotiations with the board.