Adnan Adams Mohammed
The World Bank office in Ghana has disclosed that Ghana is likely to receive the first tranche of the US$1.1billion budget support by September ending.
This will be possible only if the two are able to reach a final agreement on the conditionality.
In accordance to this, World Bank wants the government to present a strong reform package to enable the World Bank release the $300 million facility which is expected to serve as budget support extended to Ghana over a four-year period while under the IMF programme.
“Our plan, our hope is we can bring this to the board by September. But it will all depend on how fast we reach agreement with government on the pro-actions. The Country Director, Pierre Laporte, noted. “It may be September, it may be October, but we’re hoping we need to do it this year because IMF has factored it into its financing gap,” he said in an interview last week.
He explained that, “But this US$300 million, I want to be very clear is not acquired, is not given, is not taken that World Bank will come and give. We need to have a strong reform package from government that accompanies as prior actions for the release of this US$300 million and these have to be in areas where us and government agree these areas that have caused problems for the budget or for the sector.”
He noted that there are four key pillars in Ghana’s economy that need urgent reform.
“One is the whole aspect of domestic revenue mobilization…because as we all know Ghana’s revenue to GDP ratio is quite low, and we’re hoping to accompany IMF reforms there, government reforms, to raise revenues and there’s a whole aspect on fiscal management, PFM, expenditure management.
“The second aspect is private sector development and financial sector to accompany our financial sector project. We will also push for some reforms in the financial sector because it’s one thing to put money to address the problems now but there are some long term issues that remain outstanding and it will be important for Ghana to resolve and we will support that reform in the project,” he said.
He continued, “As I said before, when you have a kind of very severe consolidation as you’re having now it’s important to consider the growth agenda also. Because one thing is to squeeze the budget for you to realign and pay your debt in the future, protect the poor which we do through the social protection project but also how do you keep the economy going.
“You need to maintain your growth agenda, you need to maintain economic growth because the faster you grow the faster the ratio of revenue improves, your ability to pay your debt improves and the economy will recover faster. And we want to discuss with government certain reforms in the investment climate, because what brings you FDI is a good sound investment climate and today there are areas that Ghana needs to do more.”
He further noted that government will need to introduce huge reforms in the energy sector, and fast.
He is hopeful that the IMF-World Bank programme will accelerate those reforms.
“But the other two is energy, as I’ve said before energy is a huge burden on the fiscal framework. Government is subsidising the energy sector over 1 billion dollars a year and something needs to be done urgently. And I must say that unfortunately reform in that sector has been slow. We’re hoping with the programme it will accelerate.
“And finally the whole show of building resilience, we have a pillar that will bring support to build social economic resilience and improve your social protection framework…and finally climate resilience,” he said.