Finance Minister Seth Terkper says the verdict by the IMF board on the country’s performance under the Fund programme is a clear indication that government is on track to stabilize the economy.
Tekper, however, told Joy Business government is not complacent by the favourable outcome of the IMF review.
Government is committed to working hard to improve the economic environment, he said.
“It’s a complement to government as well as to the people of Ghana,” the Finance Minister said.
The IMF verdict, according to him, is an endorsement that whenever there are misalignments in the budget and other economic indicators government will be capable of making the relevant corrections.
Government turned to the Bretton Woods institution for financial assistance to tackle mostly external economic pressures in exchange for a commitment to strict economic discipline.
Government in February this year, secured $940 million deal from the IMF to help the country turn around the troubled economy.
An unstable cedi and high fiscal deficit are key problems of the economy.
The three main pillars of the IMF bailout are: restrain and prioritize public sector spending, increase tax collection and strengthen the effectiveness of the Bank of Ghana’s monetary policy role.
Ghana's economic woes are far from over months after the three-year deal.
The IMF board on Monday August 31, 205 gave Ghana a satisfactory verdict after reviewing its performance under the bailout programme.
It also approved the disbursement of almost 117 million dollars for Ghana.
The fund also noted that that government must firmly continue with its fiscal consolidation efforts to fully restore macroeconomic stability and mitigate financing risk.
The IMF Board also recommended that government should continue to adhere to the domestic arrears clearance plan and avoid incurring any new arrears, since implementing structural reforms to strengthen expenditure control will support these efforts.
The IMF said government should use the resulting fiscal space to enhance its social protection programs to mitigate the potential impact of the fiscal consolidation on the poor.
To avoid the risk of fiscal overruns in connection with next year’s election, the Washington-based lender said it is imperative for government to identify the full cost related to the elections as early as possible and provide for it in the 2016 budget while ensuring that the fiscal targets will be achieved.
ROOM FOR IMPROVEMENT
Economics professor, Peter Quartey, however says it will be rash for government to toast its achievements and see the outcome of the review as a success.
Professor Quartey says the IMF report rather shows that there is more room for improvement.
“If you score ‘satisfactory’ in any assessment, clearly it shows it is not very good and there are things you need to do to correct the imbalances”, he said.
According to him the fact that the IMF granted waivers for non-observance of performance criteria regarding gross credit to government and non-accumulation of external reserves should get managers of the economy thinking.
He surmised that had the IMF taken into account some of the criteria it waived, the outcome of the review would have been gloomy.
“It is a clear signal for [government] to put its house in order”, he said.
Source: Joy Business
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