IMF backs Ghana budget plan

25 Nov 14
The International Monetary Fund has endorsed Ghana’s budget for next year, which aims to cut the fiscal deficit by 3.5 percentage points.

Following an IMF mission to Ghana, which concluded on November 20, mission chief Joël Toujas-Bernaté said Ghanaian authorities had made significant progress towards strengthening macroeconomic policies and reducing the current account deficit

‘With projected arrears repayments of 1.2% of gross domestic product next year, the cash deficit will be equivalent to 6.5% of GDP in 2015, down from 9.5% in 2014,’ said Toujas-Bernaté.

‘The budget includes some important measures to increase revenues, to eliminate distortive and inefficient energy subsidies, and to contain growth in Ghana’s comparatively high public wage bill.

‘At the same time, the budget allows for maintaining public investment above 5% of GDP as well as increasing social protections spending targeted at the most vulnerable.’

Pledges to reforms public financial management, enhance tax administration and clean up the public sector payroll were also welcomed.

‘These efforts, together with the implementation of appropriate pay and hiring policies, will help further control the wage bill, which has been a significant source of fiscal risk.’

He added that once this work was completed, the IMF would agree a financial arrangement to support Ghana’s economic programme.

In his Budget statement, delivered on November 19, finance minister Seth Terkper restated the government’s commitment to strengthening expenditure management ‘notably in pay roll management which will reduce waste and corrupt practices’.

He added that state institutions would be strengthened and governance improved, 50 new secondary schools built, health facilities expanded, road and water systems completed and energy capacity boosted.

Terkper also reiterated that Ghana would shift from accounting on a cash basis to accounting on an accrual basis and would adopt International Public Sector Accounting Standards.           

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