|
Getting your Trinity Audio player ready...
|
President John Dramani Mahama has clarified that his administration has no immediate plans to extend Ghana’s $3 billion Extended Credit Facility (ECF) with the International Monetary Fund (IMF).
Speaking in an interview with Bloomberg TV at the Munich Security Conference last Monday, President Mahama emphasized that while the possibility of an extension remains open, his government is currently focused on executing the existing agreement.
“We’ve not talked about an extension of the program. We are determined to continue with this program,” he stated. “If it’s necessary to look at additional funds or to extend the program, we’ll look at it, but for now, we are determined to continue on this trajectory.”
—
Strengthening Economic Policies Through IMF Partnership
During recent discussions with the IMF, President Mahama’s administration outlined several key proposals aimed at stabilizing the economy and ensuring the effectiveness of the ongoing ECF arrangement.
The $3 billion program, which was approved on May 17, 2023, is a three-year initiative designed to support Ghana’s economic growth and fiscal recovery. Talks with the IMF focused on tax rationalization, debt management, and prudent financial policies—all crucial for strengthening the country’s economic outlook.
—
Reforming Ghana’s Tax System for Sustainable Revenue Growth
One of the central topics in discussions with the IMF was tax rationalization. President Mahama criticized the previous administration’s approach of imposing multiple taxes, arguing that it led to diminishing returns, as increasing tax burdens resulted in lower overall revenue collection.
“Because of the target of achieving 24 percent revenue to GDP by 2028, the program required that revenue should continue increasing at a certain rate,” he explained.
“Unfortunately, what the previous government had done was just to slap on more taxes, and we had gotten to a stage where the more taxes that were put on, the less revenue that came in. And so it’s necessary for us to look at the whole tax handle, rationalize them, make them more transparent, easy to understand, so that we can have better compliance.”
To address these concerns, President Mahama revealed that the IMF has agreed to provide technical assistance in reforming Ghana’s tax system. This support aims to improve efficiency, enhance compliance, and create a more business-friendly tax structure.
—
Managing Debt and Promoting Fiscal Discipline
In response to Ghana’s ongoing debt restructuring efforts, President Mahama acknowledged the significant domestic debt obligations exceeding $15 billion due in 2025. He outlined proactive measures taken by his administration to manage these financial commitments, including the reactivation of the country’s sinking fund to assist with debt repayments.
“We also have the issue of the debt restructuring and humps that have been created this year; we have to pay in excess of 15 billion (dollars) on the domestic debt exchange,” he noted. “So what we’ve done is to reactivate the sinking fund and put more resources into it to take care of the repayments that have to be made this year.”
He further stressed the importance of fiscal responsibility, reaffirming his government’s focus on controlling expenditures and prioritizing key programs.
“We must be more prudent in our handling of our finances, we must also look on the expenditure side and see how we can cut waste and also shift resources to more priority programmes,” he stated.
—
Upcoming Budget and IMF Review
As part of Ghana’s economic recovery roadmap, President Mahama highlighted the upcoming budget presentation in March, which will incorporate insights from the latest IMF staff review. The fourth IMF review is scheduled for April, and the government is aligning its fiscal policies with the fund’s recommendations.
“The next review, which will be the fourth review, is due in April, but before that, we’ll present the budget in March,” he explained. “So the budget will take into focus some of the issues that have come out from the staff mission. We’re hoping to receive the aid memoir today or tomorrow, and looking at the issues that IMF raises, we will incorporate them in the budget.”
Despite the current economic challenges, President Mahama expressed confidence in Ghana’s relationship with the IMF, describing it as “cordial.” He reiterated his administration’s commitment to maintaining this partnership, ensuring the successful implementation of the ECF program, and steering Ghana towards long-term economic stability.
Email Daily Mail GH: stories@dailymailgh.com or
Whatsapp: +233(0)509928122
