As Ghana is prepares to exit, by April 2019 the International Monetary Fund’s Extended Credit Facility programme begun in 2015, the country has been able to meet six of the nine quantitative targets set by the Fund.
This is according to a statement by the IMF head of mission, Ms. Annalisa Fedelino, at the end of the visit by the Fund’s staff team to Accra, indicating preliminary findings on the combined seventh and eighth reviews of Ghana’s ECF program. These are the final reviews under the programme and are based on data up to the end of December, 2018.
Although the IMF’s official statement ant the end of the staff team’s mission did not specify which targets were missed, and Government of Ghana officials have not made any public comment on the matter either, Goldstreet Business’s checks indicate that one of the missed targets relates to a ceiling on the contracting or guaranteeing of new external concessional debt.
At the beginning of the programme there were three sets of conditionalities, comprising prior actions, quantitative targets and structural reform benchmarks.
The quantitative performance criteria under the program included the following:
- A floor on the primary fiscal balance (cash) of the government, measured in terms of financing;
- A ceiling on gross credit to government by the Bank of Ghana;
- A floor on the net international reserves of the Bank of Ghana;
- A ceiling on net domestic assets of Bank of Ghana;
- A ceiling on wages and salaries;
- A ceiling on the net change in the stock of domestic arrears;
- A continuous non-accumulation of domestic arrears;
- A continuous non-accumulation of new external arrears; and
- A ceiling on the contracting or guaranteeing of new external non-concessional debt.
Data derived from the latest IMF team visit has not yet been made public. However, according to IMF data from the previous staff assessment – that from the combined 5th and 6th reviews, which contained projections for 2018, made in the third quarter of last year indicates one key target that was missed.
With regards to the ceiling on the contracting or guaranteeing of new external non-concessional debt the projection for the increase in 2018 on commitment basis was GHc14.610 billion as against the programme ceiling of GHc9.057 billion. On cash basis the increase was projected at GHc15.468 billion as against the programme ceiling of GHc9.130 billion.
With regards to the primary fiscal balance measured on cash basis, the projection for 2018 was a positive balance of GHc245 million compared with a programme target of GHc5.194 billion. Instructively however, the primary balance measured on cash basis, and excluding the cost of financial sector restructuring, was much higher at a projected GHc4.745 billion. Indeed, the IMF’s statement says that the primary balance, which measures the fiscal deficit minus interest costs was in line with programme targets.
This notwithstanding, the IMF Board is expected to consider the combined seventh and eighth ECF reviews by end-March 2019.
Completion of these reviews would make available SDR 132.84 million (about US$188 million), bringing total disbursements under the program to about SDR 664.20 million (US$920.58 million).
Structural Reform Benchmarks
The statement indicates that the country is advancing on the structural reforms set under the programme.
The structural conditions focused on strengthening public financial management, cleaning up the payroll, enhancing revenue collection and broadening the tax base, rationalizing the civil service, and strengthening debt management as well as the monetary policy framework.
“Ghana’s recent economic performance has been favorable despite a less supportive external environment for frontier economies,” Fedelino said.
The country’s real GDP grew by 6.7 percent in the first three quarters of 2018. However over the medium term, growth is projected to remain sustained, supported by recent oil discoveries.
Consumer price inflation, now at 9.0 percent, is well within the band around the inflation target.
The overall fiscal deficit reached 3.7 percent of the rebased GDP, excluding financial sector costs, whereas the primary surplus, which is the overall budget balance excluding interest costs, was in line with programme targets.
By Joshua W. Amlanu & Toma Imirhe