The International Monetary Fund (IMF) says its proposal to Ghana Government to reduce the budget deficit from the about 9 percent to 3.7 percent by 2017 is not overly ambitious as some have suggested.
Suggestions have been made by sources close to Government that the measure may be too ruthless and result in shocks to the country’s economy that would impose hardship on Ghanaians.
Speaking at a press conference in Washington DC at the ongoing IMF/World Bank Spring meetings, Director of the African Department at the IMF, Antoinette Sayeh explained the proposal was in line with solutions to address current challenges facing Ghana’s economy and necessary to ensure that the country does not find itself right back where it started.
“Ghana needs a considerable fiscal adjustment,” she said.
“It needs to front load that adjustment to deal with the very dire situation it has been in the course of the last two to three years as a result of very large fiscal and current account deficits and reduced growth”.
According to her, ghana’s track record in fiscal adjustment has not been the best in the past and it is very important that this problem should be addressed as soon as possible and in a way that minimizes the risk of the IMF programme going off track as the country enters an election year in 2016.
Government has struggled over the years with its expenditure, recording almost twin budget deficits over the last three years.
Ghana approached the IMF in August 2014 for a programme to deal with numerous economic challenges.
The iMF approved the programme on April 3, 2015 and the first tranche of the bailout funds hit the accounts of the Central Bank last week.