The government of Ghana will continue with its prudent management of the economy after it exits from the International Monetary Fund (IMF) Extended Credit Facility (ECF) program in December 2018.
The country’s Finance Minister, Ken Ofori-Atta gave the assurance during the presentation of the Budget Statement and Economic Policy of the Government of Ghana for the 2019 Financial Year under the theme: “A Stronger Economy, for Jobs and Prosperity” to the country’s Parliament.
He said, “Mr. Speaker, in recent times, the New Patriotic Party (NPP) government has had to inherit an IMF program which we have successfully completed.
Notwithstanding exiting this current program after successful completion, we will continue with our prudent management of the economy and buttress that with legal and institutional measures to ensure irreversibility of the gains made so far.
“As we complete and exit the program in December 2018, we are also instituting measures to ensure irreversibility of the macroeconomic gains made. We will, among others legislate a fiscal responsibility rule to cap the fiscal deficit to no more than 5% of Gross Domestic Product (GDP) as part of measures to promote budget credibility and fiscal sustainability, strictly enforce the Public Financial Management (PFM) Act to promote efficient and effective public financial management and continue with the zero central bank financing arrangement with the Bank of Ghana (BoG) to curb fiscal dominance as part of measures to rein in on inflation.”
Other measures the minister outlined were maximize domestic resource mobilization and increase Tax Revenue-to-GDP ratio to levels in line with our peer Lower Middle-Income countries, implement expenditure efficiency and rationalization measures to increase efficiency in public spending and free more fiscal space for growth oriented and job-creating programs, enforce the Public Procurement Act and ensure sole sourcing is minimized to promote competition and efficiency in public spending, thereby, promoting value for money; and institute risk management framework to mitigate macro fiscal risks.
The minister reiterate the intention of the Ghanaian government to continue to collaborate with the international financial institution.
“However, as a member in good standing, we will continue our productive policy and technical collaborations with the IMF.”
The Executive Board of the IMF on April 3, 2015 approved a three-year arrangement under the Extended Credit Facility (ECF) for Ghana in an amount equivalent to SDR 664.20 million (180 percent of quota or about 918 United States Dollars (USD) in support of the authorities’ medium-term economic reform program.
The country entered into the arrangement with the IMF after almost two decades of strong and broadly inclusive growth, large fiscal and external imbalances in recent years leading to a growth slowdown and are putting Ghana’s medium-term prospects at risk.
Public debt at the time had risen at an unsustainable pace and the external position has weakened considerably.
The government had earlier on in 2013 embarked on a fiscal consolidation path but policy slippages, exogenous shocks, and rising interest costs have undermined such efforts coupled with acute electricity shortages also constraining economic activity.
Ofori-Atta acknowledged the role and contributions of the Fund towards the attainment of macroeconomic stability and growth in the country.