The International Monetary Fund (IMF) has stated that Ghana’s economic outlook still remains challenging.
The IMF which approved Ghana’s third review under its ECF program on Wednesday says though there has been progress in stabilizing Ghana’s macroeconomic situation and reducing financial imbalances fiscal risks still remain elevated.
A statement from the fund on the approval on the third review said during the review, adjustments were made to the program to ensure that it remains on track and to enhance its prospects of success.
This lead to Executive Board of the Fund granting waivers including minor deviations in a few program targets. Ghana’s three-year arrangement with the IMF which will see the disbursement of a total of US$918 million was approved on April 3, 2015.
The program aims to restore debt sustainability and macroeconomic stability in the country to foster a return to high growth and job creation, while protecting social spending. Meanwhile the IMF says further efforts are needed to address revenue shortfalls, while expenditure control measures should be fully enforced to contain the wage bill and other current spending.
It adds that government is projected to run a primary surplus this year, which, along with the stability of the cedi, should contribute to a marked decline in the debt-to-GDP ratio.
Ongoing fiscal consolidation and implementation of the medium-term debt management strategy will be key to further reducing domestic refinancing risks in 2017. The authorities will need to remain cautious in accessing external market financing with due consideration to costs and debt sustainability.
Mr. Tao Zhang, Acting Chair and Deputy Managing Director “to ensure that the gains from fiscal consolidation are sustained over the medium term, the government needs to continue its efforts to effectively implement a wide range of ambitious reforms.
These include measures to broaden the tax base and enhance tax compliance, strengthen control of the wage bill, and enhance public financial management (PFM). In this regard, the recently adopted PFM legislation is an improvement over previous laws.
Steps taken to address SOEs financial problems are welcome, but more work is needed to reduce risks to the economy, the financial sector, and the government budget from their underperformance’.
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