Finance Minister Seth Terkper has ruled out any move to renegotiate some terms under the US$ 918 million three year credit facility programme with the International Monetary Fund (IMF).
As part of the programme, Ghana is required to reduce the Bank of Ghana’s (BoG) financing of government’s budget from 10 percent to zero.
Speaking to Citi Business News in parliament after the presentation of the supplementary budget, a Deputy Minister of Finance Madam Mona Quartey hinted that government may have to renegotiate the provision if parliament decides to maintain the cap at 5 percent.
But speaking at a post supplementary budget briefing, Mr. Seth Terkper maintained that there is no need to re-engage the IMF on the issue since government is already working to achieve the zero percent provision.
“Let’s be patient till when parliament takes the decision but if even in the event that parliament comes out with the number above five, does it warrant a renegotiation of the IMF agreement?. I will say no,” he said.
He stated that government is considering many factors to protect critical sectors of the economy.
He pointed out for example that, because of the ECOWAS convergence criteria and some emergencies, government was critically assessing the practicality of the zero financing.
“Because of the ECOWAS convergence criteria, because of emergencies and the rest there was a strong debate that fiscal discipline is right but we have to look at all the factors,” he said.
Mr. Terkper explained that parliament could maintain the cap at 5 percent but government’s commitment to attain zero percent financing will be pursued.
“With the current BoG Act, the law allows the central bank to finance government’s budget at 10 percent, but I did say before the beginning of the year that we are going to pursue a zero percent financing,” he said.
He stated that at the end of 2015, government has been able to reduce the financing from 10 percent to 5 percent.
“This is what we are saying about the zero financing of the budget. It’s a process that we are going through by enhancing fiscal discipline,” he said.
Expressing optimism in government achieving the provision, Mr. Terkper stressed that it will take a number of fiscal consolidation to reduce the financing gradually.
IMF programme with Ghana
On Friday, 3rd April, 2015, the Executive Board of the International Monetary Fund (IMF) approved a 3-year Extended Credit Facility (ECF) Programme for Ghana.
A total amount of SDR664.20 million (US$918 million) will be given to Ghana as balance of payments support over the 3-year period.
The total amount will be disbursed in eight equal tranches. The first disbursement was made immediately after the Executive Board approval of the programme.
Government is currently waiting the third tranche after an IMF team visited Ghana to undertake an assessment.
By: Lawrence Segbefia/citibusinessnews.com/Ghana