IMF Completes 5th Review Under ECF Arrangement For Ghana

The International Monetary Fund (IMF) has completed the fifth review of Ghana�s economic performance under a programme supported by the Extended Credit Facility (ECF), approving an amount of US$91.55 million disbursement for Ghana.

The Fund in a statement issued on Wednesday said the approval of the US$91.55 million, equivalent to Special Drawing Rights (SDR) 59.58 million, brings the total disbursements under the arrangement to about US$412.28 million (SDR 268.31 million).

The Fund�s Executive Board also approved a modification of a performance criterion related to Ghana�s non-concessional borrowing limit to provide additional room for scaled-up infrastructure investment.

The three-year ECF arrangement was approved on July 15, 2009, with access equivalent to SDR 387.45 million (about US$595.35 million or 105 per cent of quota). The Executive Board�s Acting Chair, Mr. Naoyuki Shinohara, said: �Ghana�s economy has improved significantly since the start of the government�s Fund-supported programme in 2009.

�The fiscal and external current account imbalances have been greatly reduced, growth has strengthened, inflation has declined to single digits, and international reserves have recovered.�

He said fiscal challenges ahead include further revenue mobilization, containing current spending, and improving spending efficiency to create space for critical infrastructure investments. �The 2012 budget is consistent with making progress in these areas�, he noted.

�Monetary policy implementation has been consistent with the authorities� inflation target, and the Bank of Ghana should stand ready to adjust policy rates as signs of rising price pressures emerge,� Mr Shinohara said.

He said while the country�s debt sustainability analysis suggested scope for higher non-concessional borrowing, and some of the planned projects promise significant returns, a further strengthening of debt management and project appraisal capacities was critical to keep the debt burden manageable.

�While energy pricing has improved, decisive action is needed to tackle the re-emergence of costly and poorly targeted subsidies on petroleum products. Following an initial increase, maintenance of prices at cost-recovery levels will be essential.

�Monetary policy implementation has been consistent with the authorities� inflation target, and the Bank of Ghana should stand ready..To manage liquidity effectively, the Bank of Ghana should continue refining its policies and communication on foreign exchange market interventions.

�Financial sector reforms should focus on making further progress on enhancing supervisory capacity, strengthening banks� risk management, resolving vulnerable institutions and addressing deficiencies in Ghana�s Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime,� Mr. Shinohara added.

Source: GNA