IMF reviews Ghana’s economy

From: Ghana | Daily Graphic

A team from the International Monetary Fund (IMF), led by Ms Christina Daseking, is in the country to carry out the fifth economic review under the Extended Credit Facility arrangement since June this year.

The team will review Ghana’s economic performance under the Extended Credit Facility and the outlook for Ghana over the medium term.

The IMF team will call on key people within the economy, including the Minister of Finance and Economic Planning and officials at the ministry, the Governor of the Bank of Ghana and his officials, members of the Parliamentary Select Committee on Finance, and development partners.

The team will also have discussions with members of civil society organisations and seek their views and concerns on economic policy choices and reform initiatives after which it will meet the press on Tuesday to interact and share some of its preliminary findings.

The completion of the mission is crucial to Ghana’s attempt to secure a $3 billion loan from China for infrastructural projects.

Parliament has already approved the Master Facility Agreement covering the $3 billion loan, which would be used on a number of projects such as gas processing facility, gas transmission pipelines, the building of railways and trunk roads.

Following a presentation to a Joint World Bank/IMF Team in Washington on September 28, 2011 by a team from Ghana led by the Finance Minister, Dr Kwabena Duffuor, the IMF and the World Bank indicated their support for Ghana’s procurement of the loan.

The fund is expected to meet to take a firm decision on its support in December after a country economic review exercise which would determine the impact of the loan on the economy and whether it breaches any agreements.

Already, the World Bank is reportedly carrying out its own assessment of the loan on Ghana’s economy, quality of life and debt sustainability.

The IMF’s fifth review is therefore crucial to the setting of a new ceiling for non-concessional borrowing, as it did for the about $50 million non-concessional loan the country procured to purchase fire engines for the fire service.

The current agreement under the ECF reached in May 2011, expiring in June 2012; put the ceiling on non-concessional loans at $800 million. The limit was set at a time when the oil revenue inflows had just started trickling in. Ghana’s remarkable and unprecedented growth of 23 per cent in its Gross Domestic Product (GDP) means that an upward review of credit limit for non-concessional loan is likely.

The IMF supports Ghana mainly to fix its macroeconomic indicators to achieve the stability needed for business planning and growth, while the World Bank broadly supports projects through the national budget and sector-specific interventions to achieve growth and development while reducing poverty.