We’re on course for faster rebound – Terkper

Finance and Economic Planning Minister Seth Terkper is hopeful that with donors beginning to release previously locked-up funds, the economy is sure to rebound at a much faster pace.

With confidence in the economy picking up after the country excelled in the first review of the International Monetary Fund (IMF) programme, donors have started releasing funds which were previously held due to poor management of the economy.

Mr. Terkper, speaking at the signing ceremony of three credit agreements between government and the World Bank Group, said the country’s development partners are beginning to see some turnaround in the economy’s management, hence the support.

The agreements include US$150million budget support as well as a US$25million financing deal for Transport Sector Project, with the other being a US$45million deal for Public Financial and Management Reform Project.

Hitherto, donors were said to have withheld about US$700million inflows owing to the way the economy has been managed over the years.

But at Wednesday’s signing ceremony, which will see the World Bank release some US$150million to support the budget, Mr. Terkper was confident that the action by the Bretton Woods institution will have a catalytic effect on the economy’s fortunes.

“The donor flows that dried up have started flowing again -- including the World Bank budget support which is part of the agreement we signed today. If there are any doubts on the minds of the sceptics, I think these agreements (signing ceremony) showing donor support as well as other inflows, such as a second tranche of IMF funds, should clear them,” he said.

Various credit ratings agencies such as Fitch, Moody’s, and Standard and Poors have over the last couple of years had basis to downgrade the country’s sovereign ratings, following numerous concerns such as rising debt dynamics, fiscal deficit etc.

But the Finance Minister believes that the economy can recover the grounds it has lost -- relying on the US$150million World Bank budget support in addition to a policy-based guarantee of US$400million for covering securities-issuance by government up to US$1billion.

“I am hopeful we are going to return to the ratings that we lost, given our current performance and trajectory,” the minister said.

The announced support is the first in a series of three development policy financing (DPF) operations called Macroeconomic Stability for Competitiveness and Growth. Mr. Terkper said the credit is expected to play a key role in the attainment of various macroeconomic targets as contained in the budget.

More donor support

Just after signing the deals with the World Bank, the Finance Ministry also signed an agreement with KfW Development Bank that will see the release of €17.1 million under the IDA concessional terms to support the budget.

The amount, KfW said, will be devoted to implementation of various initiatives -- the majority of which are in the social services sector and intended to improve the living conditions of several households and communities in the rural and deprived parts of the country.

The agreement, the Multi Donor Budget Support, was first of two agreements; with the second, the Outgrower and Value Chain Fund, involving the provision of €23 million also under IDA concessional terms to support outgrower schemes in various value chains of local banks.