IMF pressurises Ghana to review foreign exchange regulations

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Christina Daseking

The International Monetary Fund (IMF) has asked Bank of Ghana (BoG) to review the new foreign exchange regulations after an appropriate evaluation period to mitigate any unintended consequences on the country?s economy.

However, the Fund agreed with BoG that the new foreign exchange regulations alone will not resolve the underlying pressures in the foreign exchange market.

Christina Daseking, leader of the IMF Mission to Ghana, in a statement said, Ghana?s economy slowed down on the back of sizable external and fiscal imbalances and energy disruptions in the first half of the year.

On the fiscal side, she said revenue shortfalls, overruns in the wage bill and rising interest costs pushed the 2013 deficit to 10.9 percent of Gross Domestic Product (GDP) as against a target of 9 percent.

?The overrun would have been higher in the absence of significant revenue measures, elimination of fuel subsidies, large increases in utility prices and compression of other expenditure,? Daseking said.

She said the large fiscal deficit, coupled with a weaker external environment, led to a widening of the current account deficit to 13 percent of GDP and further put pressure on international reserves.

Daseking said, ?The weakening growth momentum and inflationary pressures are expected to continue into 2014 and called for urgent measures to address macro-economic imbalances.

She said in the absence of further measures, the fiscal deficit target of 8.5 percent of GDP would be at risk, stating that ?This, combined with a weak outlook for gold prices, would also keep the current account deficit at high levels.?

The mission from IMF visited Accra from February 12 to 25 2014 to hold discussions for the 2014 Article IV Consultation.

?On its return to Washington D.C., the team will prepare a staff report that is tentatively scheduled for discussion by the Executive Board in late April. The Board discussion will complete the Article IV Consultation.?

The delegation also met Vice-President Amissah-Arthur, Finance Minister Seth Terkper, Bank of Ghana (BoG) Governor, Dr Kofi Wampah and other senior officials, Members of Parliament (MPs), representatives of the private sector, think tanks and civil society.

By Cephas Larbi

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