Major government economic policies are set to suffer a setback if demands by the International Monetary Fund(IMF) for Ghana to cut its projected 2 billion dollars Eurobond to 500 million dollars is made to stand— that is a warning from economist, Dr. Lord Mensah.
Reuters News agency this weekend reported that a document it has sighted is pressing on government to introduce new taxes, as well as reduce its intended 2 billion dollars Eurobond to 500 million dollars.
The decision was reached after a mission visited Ghana last week.
Government has a number of projects it is yet to complete including, the One District, One Factory; One Village One Dam, stimulus packages to SMEs and Planting for Food and Jobs, among others.
But speaking to Citi Business News, economist, Dr. Lord Mensah warned that the major projects yet to be undertaken may suffer, hence government must move quickly to consult the IMF to increase the money that will be issued as a Eurobond.
He stated that government is always keen on meeting its inflow projections, hence the latest demand by the fund could mean that government make some adjusted.
“The government knows what they have budgeted for, and with all the projections going to the policies that they intend to roll out for the year, if they are asked to raise one-fourth of what they intend to, obviously it will throw the government out of focus,” he cautioned
Dr. Mensah was of the view that even though the decision by the IMF is to control government’s appetite for borrowing, the Nana Addo government has demonstrated that it wants to spend in the critical areas of the economy.
“It’s not a good call as far as the government is concerned, but for the economic management, it makes sense. It makes sense to cut down on the borrowing,” he said.
He observed that government can meet the IMF and explain why it needs the funds to support critical areas of the economy.
IMF urges gov’t to pass new taxes
Ghana must legislate new measures to boost revenues by at least 0.5 percent of gross domestic product before the IMF reviews a $918 million credit deal next month, a Reuters report has said.
The report also stated that government must outline plans to clean up the financial sector and show stronger commitment to cut debt, including limiting its next Eurobond for budget support to $500 million.
Finance Minister, Ken Ofori-Atta said last week the government planned to issue up to $2 billion of sovereign issuance by June to pay down debt that hit 68.7 percent of GDP last November and help finance the 2018 budget.
Ghana is seeking a combined fifth and sixth review of the IMF programme in early April.
The fifth review, originally scheduled for December, had delayed pending implementation of benchmark structural reforms.