International Monetary Fund (IMF) is confident the plans outlined by the New Patriotic Party (NPP) government to cut down and eliminate some taxes will restore fiscal discipline, promote debt sustainability and support private sector development.
The fund argues that such decisions should also help reduce the large fiscal slippages observed last year.
A statement released by the visiting IMF team whose meeting ended on February 10, 2017, however, indicated that Ghana’s economy continues to face challenges.
According to the team, though the country’s 2016 estimated economic growth of 3.6% exceeded the Fund’s target of 3.3%, it says the decline in inflation has been slower than expected.
“The large fiscal slippages observed last year will, indeed, require strong efforts of fiscal consolidation to support debt sustainability. The new government’s intentions to reduce tax exemptions, improve tax compliance and review the widespread earmarking of revenues should help in this regard.”
“We welcome the new government’s intention to conduct a full audit of outstanding obligations, its commitment to transparency and its readiness to take strong remedial actions to ensure the integrity of the PFM systems going forward,” the statement by the visiting team added.
Meanwhile, the IMF wants the government to address the large financial imbalances of state-owned enterprises in the energy sector with urgency to avoid the buildup of contingent liabilities for the new government.
“The large financial imbalances of state-owned enterprises in the energy sector also need to be addressed with urgency to avoid the buildup of contingent liabilities for the new government. We welcome the new government’s commitments to encourage its departments and agencies to implement growth-enhancing reforms in a fiscally sustainable manner.”
In addition, the IMF has demonstrated its readiness to support the government achieve economic stability.
“We look forward to working closely with the new government in their efforts to design the required policies for restoring macroeconomic stability, high and sustainable growth and job creation.”
The team led by Toujas-Bernaté met with Vice President, Dr. Mahamudu Bawumia; Senior Minister, Hon. Yaw Osafo-Maafo; Finance Minister, Hon. Kenneth Ofori-Atta; Minister of Food and Agriculture, Hon. Dr. Owusu Afriyie Akoto; Bank of Ghana Governor, Dr. Abdul-Nashiru Issahaku; other senior officials; and Ghana’s development partners.
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