Minister for Finance-Mr Seth Terkper, International Monetary
Fund (IMF), Joel Toujas-Bernate-IMF Mission Chief for Ghana, Volta
River Authority (VRA), Bank of Ghana (BoG), Electricity Company of
Ghana (ECG). IMF mission chief Joel Toujas-Bernate.
What, Why & When:
The IMF mission to Ghana for the 3rd review of the country's
bailout programme with the Bretton Wood institution ended on
Friday, 2nd September, 2016i. Afterwards Ghanaian
Finance Minister Seth Terkper was quoted in the press describing
progress made so far as satisfactory and indicative of the
government's commitment to the bailout programme: A USD918
million three-year Extended Credit Facility (ECF) launched in
The mission among other things focused on updating the
macroeconomic projections and also accessing the financial
difficulties faced by State Owned Enterprises (SOEs) in the energy
sector especially the Volta River Authority (VRA), which owed
approximately USD1.5 billion to about 13 banks as at July this
year. See Update (18 July):
VRA Engulfed in Debt.
Government has agreed to pay GHC 2.2 billion (USD555 million) of
the debts with an initial payment of GHC 250 million in the coming
days. Joy Business reported. According to Terpker, as at 31st
August, 2016, the energy levies imposed at the beginning of the
year had generated GHC 350 million (USD88.2 million) which will be
used to defray the debt in the energy sector.ii
Despite Terkper's description of events, concerns have been
raised by the IMF about the passage of Bank of Ghana (BoG)
amendment law, which pegs central bank financing of central
government deficit at 5%.iii This is against the
IMF's proposal of zero percent BoG financing of the government
deficit. While the government/parliamentary view is that some room
for maneuver is correct and necessary, the fund is concerned about
the typical cycle of election related overspend.
The visit by the IMF team to Ghana shows commitment of both
parties to continuing with the bailout programme. Since the IMF
were broadly positive in the press statement, the IMF board is
expected to approve Ghana's 3rd review when it meets later this
month, paving the way for the disbursement of about US$ 116 million
to the country. That said, the board, which will consider the staff
report later this month, may well push against the amended BoG act.
This might call for a renegotiation on that conditionality and/or
other government commitments to keep the programme running.
Currently, plans by the government to address energy sector
delinquency and its broader implications for the economy on 1)
regularising SOE debts, and 2) reorganisation of power sector
institutions themselves e.g. Electricity Company of Ghana (ECG)
privatization. The first point should reduce non-performing loans
in the banking sector and strengthen the industry if properly
adhered to. On the second, Electricity Company of Ghana (ECG)
workers have kicked against plans by the government to give the
company out on concession to a private companyiv and
litigation has been launched by members of one of the smaller
opposition parties to halt the processv.
Finally, whereas previous election cycles e.g. 2008 and 2012
most recently, have been followed by marked increases in the size
of the deficit, the ongoing programme and the current review makes
that parameters will be respected.
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Pursuant to Decision No. 323 dated 15 May 2016 (the "CM Decision"), the Saudi Arabian Council of Ministers approved the creation of the 'National Center for the Measurement of the Performance of Public Agencies' (the "Center").
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