IMF 3rd Tranche In Limbo?

The governing board of the International Monetary Fund (IMF) is expected to meet next month to decide on the release of the next tranche to Ghana under its extended credit facility (ECF) programme.

According to Mark Assibey Yeboah, Member of Parliament's Finance Committee, the deal could be put on hold.

Speaking to Accra-based Joy FM recently in Accra, Dr. Assibey Yeboah noted: “From where I sit and how I see things, the IMF has technically suspended the programme with the country.”

If the programme gets deferred, the country could lose out on the third tranche of $116 million Fund if government goes ahead to pass an Amendment Bill on Borrowing from the Central Bank.

The amendment to the Act will give access to government to borrow from the Central Bank not more than 5 percent of the previous year’s revenues, and this could constitute a deviation from the Fund's agreement with government, which has prescribed that the Bank of Ghana should not lend money to the Central Bank within the three-year period of the extended credit facility (ECF) agreement.

The IMF has assumed a supervisory role over the performance of Ghana’s economy since 2014 when the agreement was reached.

In all, the country was expected to receive $918 million from the IMF in three separate tranches under the agreement.

The release of a tranche is subject to the performance of government.

In January 2015, the first tranche of $116 million was released while the second tranche was approved in September 2015 after the Fund had expressed satisfaction with government's performance.

In its review following the second approval, the IMF said that “all performance criteria were met except for the ceiling on central bank financing to the government which was technically missed by a small margin.”

Dr. Assibey Yeboah believes the Fund may not release the third tranche because government was “not sticking to the rules of the game”.

He indicated that it was wrong on the part of government to enter into an agreement of no borrowing from the BoG since the current law allows up to 10 percent borrowing of the previous year’s revenue.

Meanwhile, government has on a number of occasions exceeded its boundary, hence the Fund's resolve to scrap off borrowing entirely.

The latest information released by the Bank of Ghana has indicated that the country's debt has hit GH¢105.1 billion, representing a debt-to-GDP ratio of 66.4 percent.

By Samuel Boadi
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