IMF Staff concludes visit to Ghana

A team from the International Monetary Fund (IMF), led by Annalisa Fedelino, visited Accra from June 20-26, 2018, to discuss recent economic developments and the outlook for the remainder of the year, and take stock of performance to date under the IMF-supported program.

The discussions focused on fiscal and monetary policies, prospects for deepening the foreign exchange market, the outlook for strengthening the financial sector, and state-owned enterprises (SOEs).

The team participated in the African Transformation Forum, and visited the Cocoa Research Institute of Ghana.

Ms Fedelino released the following statement at the end of the staff visit:

“Macroeconomic stabilization is ongoing. Growth prospects remain positive, supported by strong oil production. Investor confidence has improved, as indicated by a successful issuance of the Eurobond in May 2018. Inflation has subsided to below 10 percent. The government has stepped up structural reforms, particularly on public financial management and strengthening oversight over SOEs.

“The government’s commitment to achieving the end-year fiscal targets is encouraging. Available fiscal data suggest an increase in government spending—mainly due to frontloading of capital spending and goods and services—while revenue underperformed in the first four months of the year. Thus, we welcome the government’s intention to present a balanced and comprehensive fiscal package to Parliament at the time of the mid-year budget review in July. Such a package would help meet the fiscal objectives and support the implementation the government’s development agenda.

“The monetary policy stance remains appropriate and inflation is expected to continue to decline to the 8 percent target before the end of the year. Responding to the gradual lowering of the monetary policy rate, lending rates have also been inching down. Recent exchange rate pressures are expected to be short-lived, provided that fiscal consolidation continues. A key priority is to strengthen foreign exchange (FX) management to help foster a deeper and more liquid FX market.

“Strengthening the resilience of the financial sector would improve medium-term prospects for economic growth. The overall financial system is adequately capitalized, but weaknesses in some institutions—including high levels of nonperforming loans—can adversely impact financial stability, hamper credit growth and investment, and create contingent liabilities for the government. The Bank of Ghana (BoG) is introducing reform measures to address remaining financial sector weaknesses which would help improve the availability and affordability of credit to the private sector.

“We welcome the government’s efforts to strengthen SOE governance. Improving the financial position of the loss-making SOEs is essential for mitigating fiscal risks. We support the authorities’ decision to create a single entity to oversee the SOEs and submit a draft bill to Parliament by end-July 2018. The approval of financial recovery plans for the energy sector SOEs is essential to put them on the path of financial recovery. We look forward to the continued progress on ECG concession and a strategy for divesting the non-core assets of the Volta River Authority.

“The mission met with H.E. Vice President Dr. Mahamudu Bawumia; Finance Minister Hon. Ken Ofori-Atta; First and Second Deputy Governors of the BoG Maxwell Opoku-Afari and Elsie Addo Awadzi, and other senior officials. The IMF team is grateful to the authorities for constructive discussions and collaboration. Our special thanks also go to the Executive Director of the Cocoa Research Institute of Ghana (CRIG), Dr F.M. Amoah, and his staff for their gracious hospitality."