IMF And Gov’t Reaches Staff-Level Agreement On $3B Loan
The International Monetary Fund (IMF) team in Ghana has reached a Staff-Level Agreement (SLA) with the government of Ghana on a three-year program supported by an arrangement under the Extended Credit Facility (ECF) for about US$3 billion.
The economic program aims to restore macroeconomic stability and debt sustainability while laying the foundation for stronger and more inclusive growth, the IMF said in a statement.
The staff-level agreement is subject to IMF Management and Executive Board approval and receipt of the necessary financing assurances by Ghana’s partners and creditors, IMF Mission Chief for Ghana, Mr Stéphane Roudet noted.
He pointed out that the Ghanaian authorities have committed to a wide-ranging economic reform program, which builds on the government’s Post-COVID-19 Program for Economic Growth (PC-PEG) and tackles the deep challenges facing the country.
“Key reforms aim to ensure the sustainability of public finances while protecting the vulnerable”, he said and added that the fiscal strategy relies on front-loaded measures to increase domestic resource mobilisation and streamline expenditure.
“In addition, the authorities have committed to strengthening social safety nets, including reinforcing the existing targeted cash-transfer program for vulnerable households and improving the coverage and efficiency of social spending.
“Structural reforms will be introduced to underpin the fiscal strategy and ensure a durable consolidation. These include developing a medium-term plan to generate additional revenue and advancing reforms to bolster tax compliance. This will help create space for growth-enhancing measures and social spending. Efforts will also be made to strengthen public expenditure commitment controls, improve fiscal transparency (including the reporting and monitoring of arrears), improve the management of public enterprises, and tackle structural challenges in the energy and cocoa sectors. The authorities are also committed to further bolstering governance and accountability.
“To support the objective of restoring public debt sustainability, the authorities have announced a comprehensive debt restructuring. Sufficient assurances and progress on this front will be needed before the proposed Fund-supported program can be presented to the IMF Executive Board for approval.
“Reducing inflation, enhancing resilience to external shocks, and improving market confidence are also important program priorities. Accordingly, the Bank of Ghana will continue to strengthen its monetary policy framework and promote exchange rate flexibility to rebuild external buffers. As part of the authorities’ debt strategy, a domestic debt exchange has been launched. The authorities are committed to taking the necessary mitigation measures to ensure financial sector stability is preserved.”
At a joint press conference to announce this, Finance Minister Ken Ofori Atta said the SLA is just an aspect of the process with more work yet to be done to secure IMF management and Board approval.
He called on Parliament and creditors to contribute their quota to ensure a successful operation.
“Key fiscal measures, structural reforms and the medium-term macro-fiscal framework in the 2023 budget are aligned with the IMF-supported programme. It is therefore crucial that we receive support from all stakeholders especially Parliament to ensure that the 2023 Budget including all revenue measures are passed and creditors to ensure a successful operation.”
Source: opemsuo.com/Hajara Fuseini