The board of the International Monetary Fund (IMF) is set to meet Friday April 3, to consider Ghana’s request for a balance of payments support to help the country address macroeconomic imbalances.
Joy Business has gathered that the Board is very likely to approve recommendations by its staff for financial and technical assistance for Ghana.
According to persons working on Ghana’s programme at the IMF the Board may even proceed to recommend the advancement of 100 million dollars to Ghana later this month.
However, this will happen after the Board completes its own assessment of Ghana’s economy.
Also, market watchers and analysts will be monitoring to get details of the conditionalities from the Washington-based lender, as well as how committed Government will be in pursuing though reforms spelt out in the bailout agreement.
The conditionalities will include demonstrated commitment to continue cleaning up the ballooning wage bill which might lead to some staff rationalization in the public sector.
Government would also have to limit borrowing, remove subsidies on petroleum products and Utility Tariffs and tighten the taps at BoG to limit the central bank’s financing of the budget which has been the main source of inflationary spiral in the country and leading to rapid depreciation of the local currency.
These moves are important to make a possible Fund programme strong.
Regarding the Boards expected assessment of the health of the economy, many will be looking forward to see what the IMF’s classification of Ghana’s Debt Distress position would, in light of Government’s recent borrowings.
It would be recalled that in the IMF’s 2014 Article IV consultation report, Ghana was adjudged as being at Moderate Risk of Debt Distress.
Will that assessment change this time round and will Ghana be at a High Risk of Debt Distress? Also what will this mean for future borrowing by Government?
The $940 million dollar extended credit facility by the IMF would be spread over a three-year period with approximately $300.0 million being disbursed in each year between 2015-2017.
Source: Joy Business