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Ghana to apply for extension on IMF credit programme

Jun 28 2017 11:59
Ekow Dontoh, Bloomberg

Accra - Ghana will ask for an eight-month extension to its credit program with the International Monetary Fund (IMF) this week after failing to rein in public spending last year, Deputy Finance Minister Charles Adu Boahen said.

The world’s second-biggest cocoa producer will ask the Washington-based lender to extend the $918m, three-year debt-support program due to end in April 2018 to December of that year, he said.

While the IMF recommended that the plan be extended to allow Ghana more time to reach fiscal-consolidation targets, the nation sought better terms. Its budget deficit was 8.7% of gross domestic product in 2016 against a target of 5.3%.

“The IMF has made it a condition and directed that the extension is needed to complete all reviews for a successful programme,” Boahen said  on Tuesday in an interview in the capital, Accra. “As a government, we had to comply to ensure the objectives of the programme are achieved.”

Administration’s ‘sins’

The administration of President Nana Akufo-Addo, who came to power in January, was “paying for the sins” of the government of former leader John Mahama after the Finance Ministry earlier this year discovered $1.6bn in previously undeclared expenses, Boahen said. “We know we are more than capable of bringing our debt down to more sustainable levels,” he said.

Ghana’s debt rose to 73% of GDP at the end of last year, from 72% in 2015, Finance Ministry data show.

“An extension of the programme is by no means a magic bullet for Ghana,” Manji Cheto, a senior vice president at Teneo Intelligence in London, said in an emailed response to questions. “Much will depend on what the actual terms of the extension are.”

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imf  |  ghana  |  debt  |  economy
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