Election expenditure, debt and revenue measures dominate IMF second review
Ghana’s second programme review with the International Monetary Fund (IMF) has entered its second week, with issues concerning tax efficiency and the avoidance of fiscal slippages in this election year dominating discussions.
The IMF mission staff from Washington DC are currently in the country for a two-week assessment of the bailout package.
The review also revolves around the disbursement of the third tranche of $360 million under the credit facility and is expected to conclude this Friday, April 12, 2024.
The Fund is concerned about how the country can maintain economic stability by containing spending during the 2024 elections.
It has already been stated that the substantial deficit resulting from reckless spending in the last election significantly contributed to the economic quagmire the country faced.
Discussions have, therefore, been ongoing regarding fresh measures to anchor the signs of recovery and sustain the gains of the IMF programme.
Also taking centre stage in the ongoing review is the progress on negotiations with the country’s bilateral creditors and Eurobond holders concerning the restructuring of external debts.
Some analysts have raised concerns regarding the potential negative implications of delays in reaching an agreement on these matters.
Another key matter under scrutiny is revenue mobilization efforts. There are talks on tax measures, particularly due to the suspension of some tax handles such as the VAT on electricity.
Both the government and the IMF are considering alternative revenue sources to offset the approximately GHS1.8 billion shortfall resulting from the suspension.
This could entail the introduction of new tax measures or revisions to existing ones.
These discussions underscore Ghana’s efforts to address various economic challenges, maintain fiscal discipline in an election year, and uphold commitments under its IMF programme.
The government has expressed confidence in passing this review of the IMF programme, as it is hopeful of meeting all structural targets to unlock the third tranche of the IMF cash by the end of June.
The mission staff will return to Washington DC on Friday with their status report subject to the approval of the IMF Board.
The next review of Ghana’s IMF programme is scheduled for November 2024 and it will be the last of the two sets of reviews for this year alone.
