Gov’ts team leaves for final round of IMF bailout talks The team leading Ghana’s negotiations with the International Monetary Fund (IMF) is heading for Washington, United States to conclude talks over the economic bailout programme. This is according to the Communications Minister, Dr. Edward Omane Boamah. After the first round of negotiations, the IMF released a statement announcing some key sectors which would be targeted during the three-year bailout programme. IMF is considering a drastic cut in the public wage bill, while on issues of energy, petroleum subsidies have been earmarked for complete elimination. President John Mahama, has charged Ghana’s negotiating team to ensure that the final agreement agreed on by both parties does not affect Ghanaians negatively in the end. A statement signed by Dr. Omane Boamah mentioned that during a high level meeting between the President and his appointees on Wednesday, it emerged that the IMF’s views and positions on what needed to be done to inject greater robustness and stability into the macro-economy “were in near-perfect alignment with government’s home grown policies.” The meeting, according to the statement also discussed the performance of the economy over the last three quarters of 2014. The key issues touched on included the significant gains made by the Cedi against the major trading currencies and the progress made so far in the negotiations with the IMF over a new three-year programme. It was also agreed at the meeting that “on-going measures in the form of an aggressive import substitution programme needed to be strengthened to drastically reduce the trade deficit and improve on the balance of payment position of the country over the medium to long term.” The President has however charged Ghana’s negotiation team to ensure they do not accept a programme that will bring untold hardships onto Ghanaians. The IMF team is led by Joël Toujas-Bernaté The IMF team is led by Joël Toujas-Bernaté Gloomy outlook The IMF is predicting a gloomy outlook by the end of 2014. It said, growth will decelerate to 4 ½ percent, from the 7.1 percent in 2013, and the year will end with an average inflation of around 15 percent. The external current account deficit is projected to narrow to 10 percent of GDP, as imports declined substantially due to slower growth and a large depreciation of the currency, while export performance remained weak. Revenue generation The IMF will seek to reduce tax exemptions and strengthened revenue administration “through a better targeting of large taxpayers.” The Ghana Revenue Authority (GRA) has been struggling to meet its revenue targets, a situation that has put extra pressure on government to find scarce resources to run the economy. The IMF said the difference between government spending and revenue generation is expected to remain at around 9 ¾ percent of GDP, and one of the major reasons for this would be the weak revenue performance and a large wage bill and substantially rising cost of debt service. The statement however said it will be important to expand well targeted social protection programmes to mitigate the potential impact of fiscal consolidation measures on the most vulnerable groups of the population. The Trades Union Congress (TUC) has already warned it will resist any programme from the MF that will lead to job cuts in the public sector. When the IMF begins the programme, it will be hoping to implement it between one and two years. “A more ambitious and front loaded fiscal consolidation is needed to help place public debt on a sustainable path, and to allow monetary policy to be more effective in bringing down inflation, including by strictly limiting budget deficit financing by the Bank of Ghana.” President John Mahama has revealed that the IMF bailout process expected to elevate Ghana from its economic woes will begin in January 2015. According to the President, the IMF and the World Bank would collaborate to ensure a sustainable growth path for Ghana’s economy. The IMF is hoping to execute the said programme for Ghana within one to two years even though President John Mahama said at a UN meeting in New York that he hopes it will be implemented within three years. Discussions on a possible program that could be supported by the IMF will continue in Washington during the Annual Meetings. - By: Efua Idan Osam
Posted on: Thu, 09 Oct 2014 10:10:42 +0000
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