Debt situation may cost Ghana second tranche of IMF bailout - Ken Thompson

This review, which will be the second, under the $1 billion bailout programme, will see the release of some 114 million dollars to strengthen the country's balance of trade deficits.

The IMF has identified Ghana's widening balance of trade deficit as one of the major causes of its current slump, precipitated by a fast depreciating currency.

The funds will also help prop up Ghana’s reserves to help stabilize the depreciating Ghana cedi.

According to the ministry of Finance, government decided to subscribe to the three year bailout programme for policy credibility and to attract donor funds.

Ghana secured a pass mark from the Fund when the board carried out its first review in June. However, analysts have raised questions about the circumstances under which the IMF approved government's efforts.

According to Chief Executive Office of Dalex Finance, Ken Thompson says there are doubts about the circumstances under which government passed the initial bailout.

" The prevailing macroeconomic indicators support doubts that government passed the IMF's first review. Our debt situation in the first half of the year worsoned. Government did not meet its debt reduction targets. The cedi has been depreciating at a faster rate. So on what basis did the IMF pass us."

Ken Thompson further expressed major doubts that government will pass the second review. " Again, the macroeconomic indicators are not good enough for an approval. In August alone, government borrowed close to GHC5 billion, so on the front of debt minimization, it doesn't look good. The second thing is the depreciation of the Cedi. The temporary appreciation notwithstanding, the Ghana Cedi has resumed its downward slide. I will be surprised if we get an approval."

However some economists fear that the recent depreciation of the cedi will work against a favourable mark from the IMF, but Deputy Finance Minister Mona Quartey says the cedi fall will not affect Ghana’s performance rating.

“I am confident that we will continue to get pass marks as we go along because the fiscal consolidation process is going very well”, she said.

If the IMF Board finds Ghana’s performance favourable, the 144 million dollars could hit Bank of Ghana’s account in the second week of September.

The IMF programme was seen as the trigger that will help turn around the economy and address the uncertainty issues facing it.

However, few months after the programme the economy is still facing numerous challenges, notable among them being a tumbling cedi.

The IMF program was secured in April this year for the release of 918 million dollars spread over three years to stabilize Ghana’s economy.

Debt situation may cost Ghana second tranche of IMF bailout - Ken Thompson

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