Business News of Wednesday, 19 December 2018
Managing Director of the International Monetary Fund (IMF) Christine Lagarde says the country’s program with the IMF would end in April 2019 and not December 2018.
The government had on previous occasions argued that the IMF program would in December 2018. But in an exclusive interview with JoyBusiness Madame Lagarde said Ghana’s program would not end this year.
“The program is to end in April , yes. I will tell you in April (whether Ghana was on track). We are all on track to delivering till April. Everything I’ve heard from the authorities is that everybody is committed to delivering till the end of the program as was concluded which has always been April.”
Madam Lagarde added, “I know that the team is working today as we speak with the Finance Minister’s team and of course they have to review numbers and to run they…but we are all working in good cooperation and I’m very hopeful that we will have the board meeting in late January or early February.”
Was the IMF program worth it?
Christine Lagarde said, “I am in no doubt that the program was worth it when I look at the numbers, but the good question is could Ghana had done the same things without our support?”
She added, “I think what the investors would be looking at is whether Ghana under the current management can actually stay the course and deliver not only political stability for which it is well-known but also fiscal responsibility and not going to binge borrowing and binge spending simply because the elections are around the corner.”
Threats to Ghana‘s economy
Madam Lagarde has highlighted the country’s rising debts and revenue shortfall as the biggest threat to the economy. Government is currently struggling to meet its revenue target for this year for the first seven months of this year. It’s currently about GHc3 billion short of the target.
Expenditure, on the other hand, has reached levels that can be described as worrying Madame Lagarde says this is an area that government may need to pay attention to.
The IMF’s Extended Credit Facility (ECF) provides financial assistance for countries with protracted balance of payment problems.
In 2015, the Ghana government entered into an agreement with the IMF for economic assistance.
The deal concluded with funding support of $918 million to be disbursed to Ghana under eight tranches.
Some key issues of the credit facility included the freezing of public sector employment, reducing the budget deficit and zero financing of the budget deficit by the BoG.