The staff of the International Monetary Fund and the government have come to an agreement on economic policies and reforms that will be backed by a new three-year arrangement under the Extended Credit Facility (ECF) of around $3 billion. This agreement is known as a staff-level agreement.
In a statement, the fund said that the government’s strong reform program, which aims to restore macroeconomic stability and debt sustainability while protecting the most vulnerable, keeping financial stability, and laying the groundwork for a strong and inclusive recovery, was a big part of why they made this decision.
However, in order for the staff-level agreement to go into effect, it must first receive approval from the IMF management and executive board. Additionally, Ghana’s partners and creditors must provide the required funding assurances.
The statement went on to say that the government has begun an all-encompassing debt operation in order to assist in the goal of restoring the public’s capacity to sustainably pay down its debt. However, the Fund stated that adequate guarantees and progress on this front would be required before the proposed program that the Fund will support can be presented to the IMF Executive Board for approval.
According to the statement, “the Ghanaian authorities have committed to a broad-ranging economic reform agenda,” which builds on the government’s Post-COVID-19 Programme for Economic Growth (PC-PEG) and confronts the significant issues that the nation is currently experiencing.
“The most important changes are aimed at ensuring the long-term viability of public finances while also safeguarding those who are most vulnerable.” In order to maximize the use of available domestic resources and reduce wasteful spending, the fiscal strategy prioritizes up-front cost-cutting initiatives.
In addition, the authorities have said that they are dedicated to bolstering social safety nets. This includes increasing the existing targeted cash-transfer program for needy households as well as boosting the coverage and efficiency of social expenditures, as was outlined in the report.
In addition, the statement indicated that structural changes would be implemented in order to support the budgetary policy and achieve a consolidation that would be long-lasting. Among these are the creation of a strategy with a medium-term time horizon for the generation of additional income and the advancement of changes to strengthen tax compliance.
It was stated that if the structural changes were implemented, they would help generate space for growth-enhancing measures as well as social spending.
In addition, efforts will be made to strengthen public expenditure commitment controls, improve fiscal transparency (including the reporting and monitoring of arrears), improve the management of public enterprises, and tackle structural challenges in the energy and cocoa sectors.
In addition, “the authorities are also committed to further bolstering governance and accountability,” which will be added to the previous sentence.
To continue, the Fund stated that “cutting inflation, strengthening market confidence, and increasing resilience to external shocks are also critical program aims.” Therefore, in order to develop external buffers, the Bank of Ghana will continue to enhance its monetary policy framework and encourage exchange rate flexibility.
A domestic debt exchange has recently been established as part of the authorities’ overall debt management plan. The government has said that it is committed to taking the necessary precautions to make sure that the financial system stays stable.
The personnel of the International Monetary Fund met with the teams of Vice President Dr. Bawumia, Finance Minister Ken Ofori-Atta, and Bank of Ghana Governor Dr. Ernest Addison, as well as officials from a variety of government institutions. The discussions took place in Ghana.
After they were done with their work, the mission team thanked the government, the Finance Committee of Parliament, and people from the business world, trade unions, and civil society for being open and helpful over the last few months.