The Senior Minister, Yaw Osafo Maafo, has said that government and the International Monetary Fund (IMF) have reached an agreement for government to roll out its ‘one district, one factory project’ as part of the review of the Extended Credit Facility (ECF) programme.
Speaking to the media in Accra, the Senior Minister said: “IMF has a programme with Ghana, and within the programme are certain restrictions. We have gone to fight for elections and we won based on our manifesto. In our manifesto, we said one district, one factory. So we need some fiscal space to implement that one.
And the IMF knows that we need it. They know that we are in power because we promised certain things. Therefore, we are marrying the two and so far, we have not had any problem. They have agreed,” he said.
He reiterated the need for government to continue to remain committed to the programme despite earlier assertions that government will discontinue it.
“The IMF programme provides market support for countries; it provides some confidence in you as a country and you do not want to give wrong signals to the market out there. When you are going to borrow, your interest rate depends on your ratings. The programme will help for people to put confidence in you as a country, so we must look at these things very carefully and make sure that Ghana does not lose its market value,” Mr. Osafo Maafo said.
Meanwhile, the IMF has expressed some concerns about the economy after it concluded its visit to the country to review the progress of the ECF programme, citing fiscal deficit deterioration as a major worry.
Joel Toujas-Bernate, leader of the mission, noted that: “In 2016, the overall fiscal deficit (on a cash basis) deteriorated to an estimated 9 percent of GDP, instead of declining to 5¼ percent of GDP as envisaged under the IMF-supported program. The large deviation was mainly due to poor oil and non-oil revenue performance and large expenditure overruns. As a result, the government’s debt-to-GDP ratio increased further to close to 74 percent of GDP at end-2016.”
He further welcomed government’s intention to control public spending and protection of the public purse.
“Significant public spending commitments that bypassed public finance management (PFM) systems were reported. We welcome the new government’s intention to conduct a full audit of outstanding obligations, its commitment to transparency and its readiness to take strong remedial actions to ensure the integrity of the PFM systems going forward.
The large financial imbalances of state-owned enterprises in the energy sector also need to be addressed with urgency to avoid the build-up of contingent liabilities for the new government. We welcome the new government’s commitments to encourage its departments and agencies to implement growth-enhancing reforms in a fiscally sustainable manner,” he added.