The International Monetary Fund (IMF) is holding back $115m from Ghana, which is the planned fourth disbursement in what some critics say reflects the Fund’s disapproval of how Ghana is implementing conditionalities in the three-year bailout programme.
Ghana expected the Executive Board of the IMF to conclude the third review in June and release the $115 million in balance of payment support but that was shifted to the end of this month.
While government is waiting anxiously for the end of this month, the Executive Board of the IMF on Monday announced that it has once again shifted the third review to mid-September saying it is evaluating Ghana’s fiscal outlook for the rest of 2016 and will consider the third review next month subject to the outcome.
Under the programme, the IMF demanded zero financing from the Central Bank of the budget deficit and state institutions.
Consequently, the Bank of Ghana Act, which permits budget deficit financing of 10%, was reviewed to 5%.
It is believed that the rejection of the zero financing did not go down well with the Fund, necessitating talks and resulting in the shifting of the review.
An IMF Statement on Ghana, attributed to Joel Toujas-Bernate, IMF Mission Chief for Ghana, said:
“Discussions between staff and the authorities are currently ongoing to update macroeconomic projections, firm up the fiscal outlook for the remainder of 2016 and ascertain that financial pressures in SOEs will not pose additional risks to the central government budget,” the Fund said in a statement.
“A visiting IMF Staff team in Accra last May assessed the implementation of the programme to be broadly satisfactory and identified a few areas where further work and discussions were needed before the third review under the ECF-supported program could be completed.
“Since then several important legislations have been adopted by Parliament, including the Banks and Specialized Deposit-Taking Institutions Bill, the Deposit Insurance Bill, the Public Finance Management Law and the Amended Bank of Ghana Act.
“The authorities have also initiated discussions to address pressures that have emerged in the main State Owned Enterprises (SOEs) in the energy sector.
“Discussions between staff and the authorities are currently ongoing to update macroeconomic projections, firm up the fiscal outlook for the remainder of 2016 and ascertain that financial pressures in SOEs will not pose additional risks to the central government budget.
“Subject to a quick and positive conclusion of these discussions, staff expects the third program review to be considered by the IMF Executive Board around mid-September.”
So far, Ghana has received $343.7 million out of the $918 million Extended Credit Facility (ECF) arrangement lasting for three years.
Ghana signed onto the deal in April 2015 to bring down budget deficits, inflation and a high public debt.
The breakdown of the $343.7 million received so far are first tranche – $116.6 million, second tranche – $114 million and third tranche – $114 million.
In the event that the Fund releases the $115m next month, it will bring total disbursements under programme to $458.7 million covering 19 months.