An International Monetary Fund (IMF) mission, led by Mr. Joël Toujas-Bernaté, visited Accra from November 6 to 20, 2014, to discuss the authorities’ economic and financial program and its possible financial support by the IMF.
The mission met with President Mahama; Vice-President Kwesi Amissah-Arthur; Dr. Kwesi Botchwey, Chairman of the National Development Planning Commission; Finance Minister Seth Terkper; Bank of Ghana Governor Kofi Wampah; the Finance Committee of the Parliament, other senior officials, and representatives of the private sector, the donor community and civil society.
Mr. Toujas-Bernaté made the following statement at the end of the visit:
“Following discussions held in Washington last month, the authorities continued to work on their economic and financial program to address domestic and external vulnerabilities. The authorities and the mission made significant progress towards reaching understandings on strengthened macroeconomic policies, including on a medium-term fiscal path consistent with ensuring debt sustainability and reducing the external current account deficit.
“The mission in particular welcomes the government’s 2015 budget, presented to Parliament yesterday, which targets a reduction of the fiscal deficit by 3.5 percentage points of GDP (on a commitment basis). With projected arrears repayments of 1.2 percent of GDP next year, the cash deficit will be equivalent to 6.5 percent of GDP in 2015, down from 9.5 percent in 2014. The budget includes some important measures to increase revenues, to eliminate distortive and inefficient energy subsidies, and to contain growth in Ghana’s comparatively high public wage bill. At the same time, the budget allows for maintaining public investment above 5 percent of GDP as well as increasing social protection spending targeted at the most vulnerable.
“The mission also welcomes the government’s aim to implement structural reforms to underpin a sustained consolidation towards a fiscal deficit objective of 3.5 percent of GDP by 2017. Reforms will include strengthening public finance management, reducing tax exemptions, enhancing tax administration and reviewing the earmarking of revenues for statutory funds. Efforts to clean up the payroll and enhance its management have been initiated and should be pursued swiftly. These efforts, together with the implementation of appropriate pay and hiring policies, will help further control the wage bill, which has been a significant source of fiscal risk.
“Taken together, these fiscal measures, combined with sound debt management and actions to further boost the effectiveness of the Bank of Ghana’s inflation targeting framework should help restore macroeconomic stability.
“The IMF team will continue to support the authorities as they work in the coming weeks in several areas, including to take concrete steps in cleaning up the payroll, finalize the remaining details of their medium-term reforms and to seek external financing assurances from bilateral donors and international institutions. Once this work is completed, a financial arrangement to support Ghana’s economic program would be agreed at staff level before being proposed for the IMF Executive Board’s consideration.”
