3rd IMF tranche: Ghana to know fate this month

Ghana will later this month know whether the International Monetary Fund (IMF) will release the third tranche of its $918million Extended Credit Facility deal with the West African country.

The Executive Board of the IMF is expected to take the decision when it meets and gets briefed by its delegation that visited Ghana last week to review the country’s performance under the three-year programme.

A statement issued by the IMF team said discussions focused mainly on updating the macroeconomic projections, firming up the fiscal outlook for 2016, and ascertaining that financial pressures faced by the main State Owned Enterprises in the energy sector will not pose additional risks to the central government’s budget.

It said understandings were reached on many of these issues, but added that outstanding questions remain with regards to certain elements of some legislations recently passed by Parliament.

It would be recalled that parliament passed the Bank of Ghana Amendment Bill which reduced government’s budget financing by the central bank to five per cent contrary to the IMF’s proposed zero percent financing.

Speaking to Class Business, economist Dr John Gatsi was of the view that the amended Bank of Ghana law would not jeopardise the IMF programme. He said government by policy can decide not borrow from the Bank of Ghana. “The current IMF programme is not about imposition. Some of the issues are very dynamic and they flow from the structure of our economy for a very long time and attempting to deal with them must be done cautiously. So, they have discussed that the law has been passed, the IMF is aware that the law when it is passed, just about a few months ago, you cannot just go back to parliament and say I want zero and you went for five per cent; that will not be done. So, I do not think that there is anything to worry about but we should also bear in mind that five per cent is the maximum that can happen. From policy point of view, you can determine that you will not do any borrowing from the central bank so you will still maintain the zero borrowing from the central bank and still be within the understanding with the IMF [but] if it becomes very difficult, then the limit you can go to is the five per cent, so I think it is not any huge problem for the programme to continue,” Dr Gatsi said.

Ghana received an initial $144.8 million in April 2015 and a second tranche of $115 million in August. The government is expecting a third tranche of $116million, being part of the $918million credit facility.