IMF warns government over high expenditure projects
The International Monetary Fund (IMF) has expressed worry over the high expenditure programs being pursued by the government.
According to the fund, even though the Akufo-Addo government promised to save money, the nature of the projects it is embarking on makes it difficult to live up to the promise.
The Fund is, therefore, suggesting that government is not allowed to borrow from the Bank of Ghana, except on an emergency basis.
“The IMF recognizes the recently issued energy bond as public debt and insists that the government classifies it as such.
“The IMF considers it a misplaced priority to be working towards reducing the indebtedness of State Owned Enterprises without first addressing the causal factors responsible for their indebtedness.
“In the view of the IMF, the government should have issued a “Vanilla bond”, not a bond through a Special Purpose Vehicle (SPV).
“IMF does not support massive injection of liquidity into the sector to address debt situation. It believes that a better approach would be to release the liquidity in tranches,” the IMF said in a document compiled after a meeting between the IMF mission to Ghana and the Civil Society Platform on the IMF program.
It added: “ The fund is concerned that while on the one hand government has passed the Earmarked Funds capping and Realignment Act, ostensibly to create fiscal space, on the other, the government has chosen to embark on a series of high expenditure projects, a move which appears to defeat of EFCRA”.
The Akufo-Addo government has among other things promised to construct at least, a factory in every district across the country and also provide one million cedis to every constituency for local development.
It has already started the implementation of its major campaign promise of providing free secondary school education for all eligible Ghanaians.