OREANDA-NEWS. November 10, 2015. A team from the International Monetary Fund (IMF), led by Jo?l Toujas-Bernat?, visited Accra from October 21–November 5, 2015, to conduct discussions on the second review of Ghana’s financial and economic program supported by the IMF’s Extended Credit Facility (ECF).1 The discussions focused on the implementation of the program, the medium-term outlook and policies needed to restore debt sustainability, macroeconomic stability, and a return to high growth and job creation while protecting the poor.

Mr. Toujas-Bernat? released the following statement at the end of the mission:

“Implementation of the program has so far been satisfactory with all end-August 2015 performance criteria met. Despite a difficult global environment, economic outcomes have been broadly as anticipated, with growth estimated at around 4 percent during the first half of the year and inflation at around 17 percent. In line with the program, the fiscal deficit is expected to decline to 7.3 percent of GDP in 2015, down from 10.2 percent of GDP in 2014. The authorities have also made progress in implementing fiscal structural reforms, albeit at a slower pace than expected in some areas. The mission welcomes the steps taken by the government in addressing payroll irregularities and advancing public financial management reform.

“Looking ahead, given the high level of public debt and financing constraints, the planned fiscal adjustment under the program will be strengthened in 2016. The budget will also face additional spending needs from the (one-off) costs related to next year’s elections and a nominal wage bill increase now projected to be slightly higher than envisaged under the program, while earmarking of revenues for statutory funds continues to reduce budgetary flexibility. Recognizing these challenges, the authorities, after discussions with the mission, prepared a package of revenue and spending measures for the 2016 budget to bring the fiscal deficit down to 5.3 percent of GDP next year, instead of 5.8 percent envisaged in the program. Steps to contain losses in state owned enterprises will also be particularly important to prevent additional fiscal pressures.

“Further fiscal adjustment along with tight monetary policy should help to restore macroeconomic stability. Building on its recent progress to improve the effectiveness of its inflation targeting framework, the Bank of Ghana remains committed to adjusting the monetary policy stance, as necessary, to bring inflation down toward its medium-term objective. This, together with the recent build-up of foreign exchange reserves, should also contribute to reducing the volatility of the cedi.

“The IMF Executive Board is tentatively expected to consider the review by the end of the year after finalization of the required documentation.

“The mission met with President John Dramani Mahama; Finance Minister Seth Terkper; Bank of Ghana Governor Henry Kofi Wampah; Dr. Kwesi Botchwey, Chairman of the National Development Planning Commission; other senior officials; and the donor community. The IMF team thanks the authorities for their hospitality, the collaboration, and the high-quality and constructive discussions.”

1 The ECF is a lending arrangement that provides sustained program engagement over the medium to long term in case of protracted balance of payments problems. The arrangement for Ghana in an amount equivalent to SDR 664.20 million (180 percent of quota or about US\\$918 million) was approved on April 3, 2015 (see Press Release No.15/159).