Amissah-Arthur confident of IMF deal

The Vice President, Kwesi Amissah-Arthur says government is confident of acquiring the US$940million Extended Credit Facility (ECF) programme approved by the International Monetary Fund’s (IMF) board to help restore economic stability. 

Speaking in Accra at the launch of the Ghana Netherlands Business and Culture Council, Vice President, Amissah-Arthur said: “We are quite confident that with the agreement we have reached with the Fund board’s approval, we will be able to better manage our economy to achieve the growth rate we think is necessary to ensure that poverty is reduced in our country.

“We are confident that with the Fund’s support, both in terms of the analytical capacity and the little support that we are getting in terms of balance of payment, we will be able to structure the economy to stabilise it for growth to begin and for inflation to be tamed in our country so that we can resume the growth we experienced a couple of years ago.” 

Since the beginning of 2014 the cedi has depreciated against the US dollar by about 40%, pushing the country to a point where it needs the IMF’s help to stabilise the currency, boost confidence in government’s policies, and accelerate the process of restoring economic stability.

Mr. Amissah-Arthur confirmed that the government and IMF have reached an agreement at the staff level for a three-year support programme. “The staff agreed that what we have proposed to them forms a consistent set of policies that will allow us to receive board approval for the programme”.

As part of the deal, government is expected to restrain growth of public expenditures through scaling-back public sector wages and salaries, restructuring and cutting funding for state-owned enterprises, and proper prioritisation of capital expenditure to safeguard social spending. It also includes improving tax collection, principally through improvement in tax compliance.

“Public expenditures through wages and through roles that government has played have expanded over the years, and we think there is need to restrain them.

“We need to restrain them through a proper prioritisation of capital expenditures; the ones that can best be done through PPP arrangements are the things that we want to do.”

He added: “Poverty levels have reduced in the country but we need to do something more, and we are saying that we’ll re-prioritise our public expenditures in order to ensure that social spending is protected.

“We also need to improve tax collection, principally through improvement in tax compliance, so that it will be up to the standard of countries at our level of development.”

These measures are expected to contain government borrowing and cause the budget deficit to contract to 8.5 percent of Gross Domestic Product (GDP) in 2014, 6.3 percent in 2015, and a more sustainable 4.5 percent of GDP in 2016.

Mr. Amissah-Arthur observed that the international arena has not been that favourable to the country as world gold price went down, cocoa prices also declined at some points, and now the oil is also affected by significant reductions in the price of those products.

This development has created significant imbalances in the economy and led to major difficulties for government in managing the economy.

“Last May in Senchi, the situation pushed citizens to get to create a consensus for the difficult choices that have to be made to make the country grow. But from Senchi, and following from Senchi and some of the works that we have done in developing a set of policies ourselves, we have arrived at an agreement with staff of the IMF for this programme,” he said.