Ghana’s growth in 2016 lowest in 20 years – IMF says as it extends ECF

The International Monetary Fund (IMF) says Ghana’s growth of 3.5 per cent in 2016 was the lowest level of growth in two decades.

It says though the country had shown mixed macro economic performances in recent years, there was serious policy slippages resulting in external and domestic imbalances in 2016.

This came to light after the 2017 Article IV Consultation on Wednesday. The consultation came on the back of the completion of the fourth review of Ghana’s extended credit facility (ECF) with the Fund.

The Executive Board has also approved the extension of the programme, which was agreed in 2015. Acting Chair of the Executive Board Tao Zhang, who is also a Deputy Managing Director of the Fund, stated that additional measures are needed to address the revenue shortfalls.

According to Mr Zhang, there were large unpaid commitments in 2016 but “the authorities have taken some encouraging steps and the economy is showing signs of recovery”.

The Board assessed that the West African country faces “long-standing challenges, including exposure to external shocks, budget rigidities, and economic inefficiencies, which have amplified the impact of past policy slippages on domestic and external imbalances”.

It also disclosed that there was revenue underperformance in the first half of 2017 and “urged the authorities to expeditiously adopt corrective measures, as needed, to preserve the program targets”.

The latest decision of extending the facility till December 2018 has come as a surprise to many after President Nana Addo Dankwa Akufo-Addo stressed that it will not be extended.

Though that stance was later clarified by the Ministry of Finance, the Fund is bent on undertaking another review of the programme.

“It is expected that the next Article IV Consultation with Ghana will take place in accordance with the Executive Board Decision on consultation cycles for members with Fund arrangement.”