“It clearly will have a catalytic effect,” IMF Managing Director, Christine Lagarde, told a news conference at the conclusion of a meeting of the IMF’s steering committee.
“When a country has signed a programme … it generally always triggers on the part of other bilateral institutions, of other bilateral lenders, financing that sometimes had been frozen or locked.”
The executive board of the International Monetary Fund (IMF), earlier this month has approved a three-year Extended Facility Programme (EFP) amounting to SDR 664.2 million (about US$ 918 million).
The EFP which is 180 per cent of Ghana’s IMF quota, comes in the wake of government’s decision to sign onto an IMF programme on Friday, August 8, to help address the current macro-economic challenges and safeguard the medium-term prospects.
A statement from the Ministry of Finance signed by the Minister, Mr Seth Terkper, said this EFP, consistent with the 2015 budget, and government’s Home Grown Programme, ‘aims to restore debt sustainability and macro-economic stability to foster a return to high growth and job creation through agriculture and infrastructure investment, while protecting social spending.’
The statement conceded that the pace of various government remedial programmes against the fiscal, current account deficits and other economic setbacks that had rocked the country since 2012, had not been fast as predicted.
The Minister said though the 2014 Home Grown Policy programme improved the situation a bit, ‘new and continuing adverse global and domestic developments continue to pose challenges to economic management.’
The falling prices of Ghana’s key commodities, especially gold and cocoa have caused a rapid depreciation of the Cedi while a recent decline in crude prices also created a revenue shortfall and necessitated a review of the 2015 budget.
Gas supply disruptions have also adversely affected energy supply and economic activity.
“Government expects that the programme will boost grant disbursements from development partners, improve macro-economic stability, help support the credibility of government’s policy and boost investor confidence in the economy,” the statement said.