IMF cites ‘dumsor’ as adversely affecting Ghana’s economy

The International Monetary Fund (IMF) has outlined factors that led to Ghana’s economic nosedive, warning that only a “forceful and sustained” implementation of its programme can address the challenges.

Among the factors outlined by the IMF is the erratic power supply.

“Acute electricity shortages are also constraining economic activity,” said Min Zhu, IMF’s Deputy Managing Director and Acting Chair of the Executive Board.

The Board on Friday, April 3 approved a three-year programme worth $918 million for Ghana.

$114.8 million is budgeted to be disbursed immediately as Ghana has been seeking the programme since August, 2014.

Speaking immediately after the Board’s approval of the deal, Mr Zhu pointed out how public debt of the country has risen to “unsustainable” levels.

“The government has embarked on a fiscal consolidation path since 2013, but policy slippages, exogenous shocks, and rising interest costs have undermined these efforts.”

He, however, noted that the programme is aimed “at strengthening reforms to restore macroeconomic stability and sustain higher growth.

“The main objectives of the program are to achieve a sizeable and front-loaded fiscal adjustment while protecting priority spending, strengthen monetary policy by eliminating fiscal dominance, rebuild external buffers, and safeguard financial sector stability.”

He noted that the achievement of the objectives will require “strict containment of expenditure, in particular of the wage bill and subsidies.

“The government’s efforts to mobilize additional revenues will also help create more space for social spending and infrastructure investment, in particular in the energy sector.”

The former Deputy Governor of the Bank of China, however, lauded efforts of government in adjusting expenditures to mitigate the shortfall in oil revenue “and avoid a larger debt build-up”.

Government of Ghana has already pledged its commitment to the success of the programme.

“As noted by H.E President John Mahama, Government is committed to implementing the measures agreed over the Programme period,” Finance Minister Seth Terkper said in a statement on Friday.