The Executive Board of the International Monetary Fund (IMF) approved on Monday the disbursement of the second tranche of its Extended Credit Facility to Ghana, a release received from the fund has said.
This followed a successful first review of Ghana’s performance under the three-year support program aimed at debt sustainability and macroeconomic stability to foster a return to high growth and job creation while protecting social spending.
Ghana will thus receive Special Drawing Rights (SDR) 83.025 million or about 116.6 million U.S. dollars, bringing total disbursements under the arrangement to SDR 166.05 million or about 233.1 million dollars.
The first tranche of 114 million dollars was released to Ghana in March this year when the three-year program was approved.
Vice-President of the IMF Zhu Min said Implementation of the ECF-supported program by the Ghanaian authorities had been broadly satisfactory despite an unfavorable economic environment.
“In particular, the government’s fiscal consolidation efforts are on track and it is encouraging that the government decided to liberalize the prices of fuel products, which bodes well for expenditure control, eliminating the need for fuel subsidies and the incurrence of arrears,” he stated.
According to the release, the Executive Board also granted waivers for the non-observance of performance criteria regarding gross credit to government and non-accumulation of external arrears based on their minor and temporary nature and the corrective measures put in place by the authorities.
The board additionally approved the authorities’ request for modifications of performance criteria.
Ghana’s three-year program, which also includes the arrangement of 664.20 million SDR or about US$918 million dollars in ECF), was approved last April.
For each release of the support funds, the country would receive 180 percent of the total quota.
“The government should firmly continue with its fiscal consolidation efforts to fully restore macroeconomic stability and mitigate financing risk,” IMF urged.
In that regard, the fund said it was crucial for the government to continue the policy of controlling the wage bill by adhering to the net hiring freeze, excluding for health care and education, while further implementing the payroll clean-up plan.
It said the government should continue to adhere to the domestic arrears clearance plan and avoid incurring any new arrears, adding that implementing structural reforms to strengthen expenditure control would support these efforts.
It also stated that the government should at the same time use the resulting fiscal space to enhance its social protection programs to mitigate the potential impact of the fiscal consolidation on the poor. Enditem