The International Monetary Fund (IMF) says its country mission for Ghana will return next month for further consultations with Ghanaian officials over the West African country’s request for a bailout.
It said the two sides had concluded successfully the second round of talks held on the tail of the Annual Meetings of the World Bank and IMF in Washington DC.
The October 14-16 meeting between IMF staff and Ghanaian officials saw Ghana’s Finance Minister Seth Terkper, Chairman of the National Development Planning Commission (NDPC) Kwesi Botchwey, minister of Employment and Labor Relations Haruna Iddrisu, and Central Bank Governor Henry Kofi Wampah attending.
“We had a productive dialogue and made further progress on identifying economic and policy reforms that could form the basis of a possible Fund-supported program,” Joel Toujas-Bernate, the Mission Chief for Ghana, said in a statement received from IMF here on Friday.
“We are also working in close collaboration with other multilateral partners, including the World Bank and the African Development Bank,” he said, pledging that discussions would continue in the coming weeks.
In August, the Ghanaian government announced its decision to go for an IMF support as one of the measures to stabilize the macro- economic environment.
It then directed its assigns to initiate immediate steps to open discussions with the fund to support the government’s programs for stabilization and growth.
IMF dispatched a team to the West African country to hold preliminary discussions with government officials in September.
“Ghana continues to face significant domestic and external vulnerabilities on the back of a large fiscal deficit, a slowdown in economic growth, and rising inflation. “These vulnerabilities are putting Ghana’s medium-term prospects at risk,” the team noted, after concluding their first visit to the country in September. It urged a more ambitious and front loaded fiscal consolidation by government to help place public debt on a sustainable path, and to allow monetary policy to be more effective in bringing down inflation.
The IMF team prescribed that the “front loaded” adjustment should be realized through reductions in Ghana’s comparatively high public sector wage costs, the elimination of costly and untargeted subsidies for energy and petroleum products, and a better prioritization of capital spending. It called for a reduction in tax exemptions and strengthened revenue administration through a better targeting of large taxpayers in order to increase revenue generation.
Although the IMF team forecast a 4.5 percent growth in Gross Domestic Product (GDP) for Ghana in 2014, the country’s statistics agency in its revised GDP estimates released on Wednesday put growth at 6.9 percent.
Inflation for the country rose to 16.5 percent in September from 15.9 percent in August, according to the Ghana Statistical Service.
The local cedi currency, which plummeted between January and August against the major international currencies, has been gaining grounds since September, sending signals of recovery, albeit slowly.
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