IMF programme still on track

A member of the Finance Committee of Parliament, Benjamin Kpodo has stated that Ghana’s extended credit facility programme with the International Monetary Fund (IMF) is still on course despite concerns the country has violated the fund’s borrowing agreement.

There has been concerns raised that Ghana could lose out on the third tranche of US$116 million from the International Monetary Fund (IMF) if government goes ahead to pass an amendment bill that will allow it borrow up to five percent of the Central Bank’s revenue.

However, Mr Kpodo explained to the B&FT that “It is very speculative. With the IMF we negotiate the conditionalities, sums that will be in the extended credit facility. These are all negotiable so for a colleague to go on air to say that because we want to cap the borrowing from the central bank to 5percent instead of 0percent, automatically IMF is not going to release monies. It does not sound well to me. In the first place the Act has not been passed- the Bill has been considered and is now being laid before Parliament and it is going to be debated. We don’t know what changes will further occur”.

“So it is presumptuous to suggest that automatically because we have expressed views on the bill, IMF is going to cut off the ECF. I don’t think that is right. The point is that IMF will not recommend borrowing from the central bank to fund the budget,” he added.

He further stated that: “all across Africa government borrow from central bank and in our present law, provision is made for 10 percent but the amendment seeks to bring first zero then later they increase it to two percent-further amendment submitted to us was that it should go to 2 percent but members of the committee felt we should up it to 5percent in line with what obtains in other West African countries. But it does not mean that the IMF is going to cut off the ECF. Everything is negotiated with IMF.”

The Member of Parliament for Ho Central maintained that: “Ghana has a sovereign nation to administer and that both parties will put their negotiations on the table- besides they have not even ignited any clause within the credit facility to pull out”His comments follows concerns raised by Member of Parliament’s Finance Committee, Dr. Mark Assibey Yeboah, that the Fund may not release the third tranche because government is "not sticking to the rules of the game".

He said government entered into a bad agreement with the IMF when it promised to pass the amendments to scrap borrowing from the BoG.

The current law allows up to 10% borrowing of the previous year's revenue. But government over the years has exceeded this limit prompting the IMF to move to scrap off borrowing entirely.

"How can you go and agree that there should be zero percent financing?" he said.

According to Dr Assibey "bad negotiations" is also an affront to parliament because it suggests that the Executive has Parliament in its pocket.