Accra, May 2, 2018//-A renowned Ghanaian economist at the University of Cape Coast, Professor John Gatsi has called for a clarity on the completion date of the three-year IMF-supported Extended Credit Facility (ECF) Program with the government of Ghana.
According to him, it was not clear if the program would indeed end on 31st December, 2018 or not.
He quoted the last sentence of the IMF’s mission completion review under the program to buttress his argument. That sentence reads: “The Fund is looking forward to the successful completion of the ECF arrangement in the coming year and stands ready to continue to support Ghana in the future.”
To this end, Prof Gatsi demanded that the certainty about the completion date of the program to be made public.
His comments come after the Fund’s review and approval of $191 million covering two belated releases, bringing total disbursements under the program to $764.1 million.
Ghana’s program aims to restore debt sustainability and macroeconomic stability to foster high growth and job creation, while protecting social spending in the West African country which is the second largest cocoa exporter after Ivory Coast.
“Another take home message is Ghana is experiencing debt repayment burden with high that and that debt to GDP ratio is marginally above 70.5%”, Prof Gatsi told African Eye Report.
The IMF stated that “as the debt burden remains elevated, continued prudence in debt management is essential to reduce the risks associated with market-based borrowing. It will be important as intended, to undertake liability management operations with part of the proceeds from the planned Eurobond to help mitigate foreign-exchange roll-over risk and smooth the debt maturity profile” .
The Fund maintained its stand on zero borrowing from the Central Bank and asked government to sign and publish the memorandum of understanding on zero financing of the government by the Bank of Ghana (BoG).
The Fund further demanded that despite the possible publication of memorandum on zero borrowing from the Bank of Ghana, there should be amendments to the Bank of Ghana Act to solidify the zero lending by BoG to government as a more robust way to eliminate the prospect of fiscal dominance.
Prof Gatsi also maintained that the take home message was very clear and crucial, stressing: “Debt sustainability as one of the cardinal metrics of a successful ECF demands greater efforts”.
“The take home message from the review meeting is more important to the managers of the economy and citizens than the amount released”.
Completion of program to spur gov’t on
Speaking at May Day parade held in Kumasi yesterday, Ghana’s President, Nana Addo Dankwa Akufo-Addo, was optimistic that the completion of the program would spur on government to implement its own policies to improve the quality of lives of Ghanaians.
In his own words: “The end of the programme means that we will have the space to design our own social and economic programmes, without jettisoning the fiscal discipline and proper economic management necessary to give entrepreneurs the predictability and stability to plan properly, invest boldly to grow their enterprises, and create jobs.”
Ghana’s three-year arrangement was approved on April 3, 2015 for about US$955.2 million or 180 percent of quota at the time of approval of the arrangement.
It 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 .
Following the Executive Board’s discussion on Ghana, Mr. Tao Zhang, Acting Chair and Deputy Managing Director, said: “Implementation of the ECF-supported program has significantly improved in 2017.
Growth has rebounded, the fiscal deficit has declined, leading to a primary surplus for the first time in fifteen years, the external position has strengthened, generating a build-up of external buffers, and key steps have been taken to address fragilities in the financial sector. Reforms should continue to entrench these hard-won gains.
By Masahudu Ankiilu Kunateh, African Eye Report
