Press Release No. 11/469

Press Release: IMF Executive Board Completes Fifth Review Under ECF Arrangement for Ghana and Approves US$91.55 Million Disbursement

December 14, 2011

The Executive Board of the International Monetary Fund (IMF) today completed the fifth review of Ghana’s economic performance under the program supported by the Extended Credit Facility (ECF). The completion of the review will enable the disbursement of an amount equivalent to SDR 59.58 million (about US$91.55 million), bringing total disbursements under the arrangement to SDR 268.31 million (about US$412.28 million).

The Board also approved a modification of a performance criterion related to Ghana’s nonconcessional borrowing limit to provide additional room for scaled-up infrastructure investment.

The three-year ECF arrangement was approved on July 15, 2009, with access equivalent to SDR 387.45 million (about US$595.35 million or 105 percent of quota).

Following the Executive Board’s discussion on Ghana, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, issued the following statement:

“Ghana’s economy has improved significantly since the start of the government’s Fund-supported program in 2009. The fiscal and external current account imbalances have been greatly reduced, growth has strengthened, inflation has declined to single digits, and international reserves have recovered.

“Pursuit of prudent macroeconomic policies and structural reforms will help preserve the stabilization gains. The government has made great strides in boosting tax revenues and repaying arrears, and has progressed in its structural reform agenda. Remaining fiscal challenges relate to further revenue mobilization, containing current spending, and improving spending efficiency to create space for critical infrastructure investments. The 2012 budget is consistent with making progress in these areas.

“The government’s plans for scaling up critical infrastructure investments translate into significant financing needs. While the debt sustainability analysis suggests scope for higher nonconcessional borrowing, and some of the planned projects promise significant returns, a further strengthening of debt management and project appraisal capacities is critical to keep the debt burden manageable.

“While energy pricing has improved, decisive action is needed to tackle the reemergence of costly and poorly targeted subsidies on petroleum products. Following an initial increase, maintenance of prices at cost-recovery levels will be essential.

“Monetary policy implementation has been consistent with the authorities’ inflation target, and the Bank of Ghana should stand ready to adjust policy rates as signs of rising price pressures emerge. To manage liquidity effectively, the Bank of Ghana should continue refining its policies and communication on foreign exchange market interventions.

“Financial sector reforms should focus on making further progress on enhancing supervisory capacity, strengthening banks’ risk management, resolving vulnerable institutions and addressing deficiencies in Ghana’s Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime,” Mr. Shinohara added.