As part of preparations towards the impending IMF Programme for Ghana, a delegation from the International Monetary Fund (IMF) has met with the management of the National Petroleum Authority (NPA).
This is the first indication that the IMF team is in the country and has commenced work toward giving Ghana the financial support it desperately needs to meet its balance of payment challenges and also economic recovery programme.
The NPA in a post made on its Facebook page, said the meeting was requested by the IMF team to discuss issues relating to the pricing of petroleum products in Ghana, where consumers have been complaining about high taxes on petroleum products, making them very expensive.
It did not give the names of the IMF team members and those of the NPA officials who met and held the discussions with them.
The NPA post said that the IMF team has been tasked to provide the Ministry of Finance (MoF) with technical assistance and conduct a comprehensive assessment of tax policies in the country.
It is unclear, if the IMF is considering as part of the over US$3 billion that the Akufo-Addo government is requesting from them as bailout, and will want the existing taxes to be increased.
Ghana is expecting to receive $3 billion dollars over three years from the International Monetary Fund, if an agreement on a programme is reached, international news agency, Bloomberg reported.
Bloomberg reported that the loan requested was double the amount of $1.5 billion the West African nation was requesting a month ago.
According to the news portal, the source agreed to give the information on condition of anonymity.
“Since negotiations for the program are starting now, it’s too early to comment on the final form the program will take,” an IMF spokeswoman said in an emailed response. “The Extended Credit Facility for low-income countries is the Fund’s main tool for medium-term support for countries facing protracted balance of payments problems, similar to Ghana’s. The duration of such an arrangement is between three to four years, and extendable to five years.” Bloomberg added.
On July 1 Ghana government announced a U-turn of an initial decision of not resorting to the IMF for support despite economic hardship hitting the citizenry.
Consequently, a team from the IMF arrived in Ghana to start negotiations with the Ghana government which has since maintained it will secure a good deal for the country.
The IMF staff team led by Carlo Sdralevich visited Accra during July 6-13, 2022, to assess the current economic situation and discuss the broad lines of the government’s Enhanced Domestic Program that could be supported by an IMF lending arrangement.
The IMF team met with Vice President Mahamudu Bawumia, Finance Minister Ofori-Atta, and Governor Addison of the Bank of Ghana.
The team also met with the Parliament’s Finance Committee, civil society organizations, and development partners, including UNICEF and the World Bank to engage on social spending.
At the conclusion of the mission, Mr. Sdralevich issued a statement saying “Ghana is facing a challenging economic and social situation amid an increasingly difficult global environment. The fiscal and debt situation has severely worsened following the COVID-19 pandemic. At the same time, investors’ concerns have triggered credit rating downgrades, capital outflows, loss of external market access, and rising domestic borrowing costs.
“In addition, the global economic shock caused by the war in Ukraine is hitting Ghana at a time when the country is still recovering from the Covid-19 pandemic shock and with limited room for maneuver. These adverse developments have contributed to slowing economic growth, accumulation of unpaid bills, a large exchange rate depreciation, and a surge in inflation.
“The IMF team held initial discussions on a comprehensive reform package to restore macroeconomic stability and anchor debt sustainability. The team made progress in assessing the economic situation and identifying policy priorities in the near term. The discussions focused on improving fiscal balances in a sustainable way while protecting the vulnerable and poor; ensuring credibility of the monetary policy and exchange rate regimes; preserving financial sector stability; and designing reforms to enhance growth, create jobs, and strengthen governance.
“IMF staff will continue to monitor the economic and social situation closely and engage in the coming weeks with the authorities on the formulation of their Enhanced Domestic Program that could be supported by an IMF arrangement and with broad stakeholders’ consultation
“We reaffirm our commitment to support Ghana at this difficult time, consistent with the IMF’s policies.
“Staff express their gratitude to the authorities, civil society, and development partners for their constructive engagement and support during the mission.”