World Bank And IMF Unhappy With Ghana

......Complains about IFC Loan
The World Bank and International Monetary Fund are concerned about government’s inability to meet its revenue targets so far this year, which has consequently necessitated significantly larger than envisaged domestic borrowing. Both institutions are also said to be worried about the potential impact of the International Finance Consortium’s expected US $1billion loan on Ghana’s foreign debt stock and on money supply growth.

The Business and Financial Times newspaper says its investigations have revealed that the Finance Minister, Yaw Osafo Maafo and a high powered delegation returned to Accra last Friday from nerve-racking negotiations with the World Bank and International Monetary Fund (IMF), both of which are uneasy over government’s fiscal performance this year. To iron things out, Osafo-Maafo and his delegation had to stay in Washington, several days longer than originally planned.

Although government has made determined efforts to reduce the public domestic debt, it has actually risen to ?11,429.6 billion, up from ?7,842.3 million when the Kufuor administration took over.

In 2001, domestic debt rose by about ?2 trillion and if the second part of 2002 is anything like the first half, the debt stock will rise by a similar amount this year. However government points out that lower interests rates and longer maturities (in the case of its three-year index linked bonds) have reduced interest payments on the domestic debt.

In 2001, interest payments on the domestic debt were down to ?477.7 billion, significantly lower than ?587.2 billion paid during the last year of the Rawlings administration.

Higher on the IMF and World Bank’s list of priorities however is the issue of Ghana’s commitment to the controversial ?I billion loan from the International Finance Consortium. Another complain is that Ghana should restrain itself in giving sovereign guarantees to secure new loans at a time some old foreign creditors including the World Bank and IMF are writing off chunk of medium to long term debts.