Ghana risks a likely delay in the disbursement of funds from the International Monetary Fund from this year, following plans to extend the deal. This is the caution from Economist, Dr Eric Osei Assibey.
According to him, the Fund will grant the request upon satisfying itself of the government’s ability to meet set targets.
“I am not too sure whether that may also affect the releases because then obviously the Fund may also want to set certain key benchmarks for the government to meet before the releases are done. It could also have some implications on the timetable that has been set for the tranches to be released.”
Monitoring and Evaluation Minister, Dr Anthony Akoto Osei has disclosed of plans to extend the program by eight more months to December 2018.
Though the extension has not been finalized by both parties, the issue featured heavily on the agenda during a visit by the IMF assessment team to Ghana last week.
“Originally the programme was expected to end on April 2018 but I know they are discussing extending it to December 2018 that may be coming at the request of the government, not the IMF. They can’t do that. The time is too short for now. So the government thought that it may be useful to end in December rather than in April,” he said.
“That is a proposal until the mission that came to do the assessment come back to government. Once they discuss it then there will be another meeting to formally make the request. The government has discussed that possibility with the IMF but nothing has been signed yet,” he stressed.
Dr. Eric Osei Assibey also tells Citi Business News the extension is necessary.
“If the government succeeds in extending the time, then it may have equally succeeded in reviewing the program,” he stated.
Meanwhile, he has urged the NPP government to among other things seek a rebate in some targets including the financing of government deficit and single digit inflation targets.
“For the zero percent financing of the budget deficit by the Bank of Ghana, I think that is a bit too strict…The law that was passed actually puts it at five percent; I think that is quite optimal for a developing country like ours,” he advised.
IMF lauds NPP’s tax cut policy
The International Monetary Fund (IMF) at its review last week said it was confident the plans outlined by the NPP government to cut down and eliminate some taxes will restore fiscal discipline, promote debt sustainability and support private sector development.
The fund argued that such decisions should also help reduce the large fiscal slippages observed last year.
A statement released by the visiting IMF team whose meeting ended on [February 10, 2017], however, indicated that Ghana’s economy continues to face challenges.
According to the team, though the country’s 2016 estimated economic growth of 3.6% exceeded the Fund’s target of 3.3%, the decline in inflation has been slower than expected.
“The large fiscal slippages observed last year will, indeed, require strong efforts of fiscal consolidation to support debt sustainability. The new government’s intentions to reduce tax exemptions, improve tax compliance and review the widespread earmarking of revenues should help in this regard.”
“We welcome the new government’s intention to conduct a full audit of outstanding obligations, its commitment to transparency and its readiness to take strong remedial actions to ensure the integrity of the PFM systems going forward,” the statement by the visiting team added.