IMF lenient to Ghana on program extension appeal

Dr. Mark Assibey Yeboah
Dr. Mark Assibey Yeboah

All things being equal, government’s desire for an extension of the International Monetary Fund (IMF) program is likely to be concluded next month, the Chairman of Parliament’s Finance Committee, Dr. Mark Assibey Yeboah has hinted.

The discussions on a possible extension of the deal have been on top of the agenda between the government and the IMF.

Already, the World Bank Country Director Henry Kerali has confirmed the International Monetary Fund (IMF) is in discussions with Ghana over extension of the Fund program.

This confirms earlier reports that government is likely to extend the fund program which should have ended in April 2018.

The move has been influenced by IMF’s concerns that Ghana may not be able to implement the critical reforms before the original completion date of April 2018.

Mr. Kerali said they are currently waiting for IMF and Ghana to reach agreement on the extension and adjustment of program targets. He added that, he does not expect an extension to have any negative impact on the economy.

“We will wait for the discussions on the extension to be concluded before the programme as revised will be announced to the public.

A clear indication of the extension of the program was from the statement made Dr. Assibey Yeboah, “We engaged the Fund when we commenced discussions them in Washington during the spring meeting but we couldn’t reach an agreement so when they come in June then government will decide whether to end the program in April 2018 or extend to December of the same year,” “Government is not keen on extending the IMF agreement but officials from the Fund are coming in June for discussions on extension”.

Even though some government officials have indicated of the likelihood of an extension, the Finance Minister, Ken Ofori Atta at a press briefing maintained that the government is committed to ending the deal in April 2018.

Though the IMF has announced its readiness to discuss plans on the extension by the government, it is yet to comment on the conditions under a possible extension.

The Assistant Director of the Fiscal Affairs Department of the IMF, Catherine Pattillo has said, despite the budget targeting moves to push debt levels down, more is needed to be done.

Regarding opting for a crush programme, Mr Kerali said, World Bank is always looking at a sustainable programme which is also the objective of both the government and the IMF to come to an agreement on a sustainable fiscal framework.

He added that such a sustainable framework can boost growth, bring the country out of its current debt levels and help fight poverty.

“We are in very much support of a sustainable programme in the medium term for Ghana not just for the IMF or World Bank.

Meanwhile, Dr. Assibey Yeboah has since given an indication that the government is less likely to extend the deal. He argues that the agreement has tightened the government’s hands in terms of borrowing to meet potential increases in expenditure bearing in mind challenges with meeting projected revenue.

“We will only go into December if only they will give us more money…if you are under the Fund’s program, you are not able to borrow so the earlier you wean yourself off, the better,” he explained.

At the International Monetary Fund’s Article IV meetings in Accra in April, it projected a more promising economic prospect for Ghana’s economy for the rest of 2017.

According to the fund, the increased oil production, declining inflation, plus other economic indicators are expected to inch Ghana’s economy towards achieving an end of year growth target of about 6 percent.

“Economic prospects in 2017 are encouraging, inflation is declining and prospects are there for a significant increase in the foreign exchange position following significant foreign exchange inflows in recent weeks.

The authorities’ initiatives are promising,” the Chief for an IMF visiting team to Ghana, Analisa Fedelino said.

Ghana in 2015 signed onto a 918 million dollar extended credit facility programme with the fund. Ghana has so far received a total of about US$464.6 million as disbursements from the IMF. The latest was on September 28, 2016.

The programme aims to restore debt sustainability and macroeconomic stability in the country to foster a return to high growth and job creation, while protecting social spending.

The deal which was not approved by Parliament has been heavily criticized by the new government, raising concerns that it will be reviewed under their tenure.

Calls for the renegotiation of the deal however have attracted mixed reactions from economists.

Source: Adnan Adams Mohammed

 

 

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