Ghana Earns $100m World Bank Support

The Board of Executive Directors of the World Bank has approved the eighth Poverty Reduction Support Grant (PRSG8) of US$100 million for Ghana. 

This facility was processed within the harmonized Multi Donor Budget Support (MDBS) framework.

It supports the implementation of the Ghana Shared Growth and Development Agenda (GSGDA 2010-2013), which succeeded the second Growth and Poverty Reduction Strategy (GPRS2).

The GSGDA emphasizes the need for macro-economic stabilization, greater public sector efficiency and executive transparency and accountability to provide the adequate setting for the reduction of poverty and socio-economic inequalities through agricultural, private sector, infrastructure and human resource development.

Specifically, the PRSG8 supports continuing and deepening efforts initiated since 2009 to restore budgetary discipline and financial stability and foster public sector reform and strengthen sustainability in the energy sector.

It seeks to protect the poor as well as develop the oil and gas institutional framework.

It is also to prevent the accumulation of new public expenditure arrears and adopt a second financial sector development strategy, adopt an action plan for the continued overhaul, commercialize state-owned enterprises and implement the decentralization policy, particularly the composite budgeting framework of the district assemblies.

It will also establish and implement an electricity automatic tariff adjustment mechanism, adopt an action plan for the restoration of the Tema Oil Refinery (TOR) financial sustainability, test and validate the common targeting mechanism for major social protection programs and establish a petroleum regulatory authority.

According to Kwabena Dufour, Minister of Finance & Economic Planning, government has taken appropriate measures to enhance fiscal discipline and stabilize the economy in pursuit of the country development agenda.

We believe that with continued support from the World Bank and other development partners, Ghana will be able to achieve the objectives set out in the Ghana Shared Growth and Development Agenda. The government has a tall order of reducing maternal mortality, eliminating extreme poverty, ensuring sustainable poverty reduction, as well as creating the conditions necessary for prosperity in our country. The PRSG8 support will greatly facilitate the achievement of these goals, he said.

Among the expected outcomes after the implementation of the PRSG8 are: a reduction in the stock of public arrears and non-performing loans in the banking sector, the implementation of a number of performance contracts for sub-vented agencies, an increase in the number of districts with effective composite budgeting, the reduction of operational subsidies to power utilities and the reduction of operational losses at the Tema Oil Refinery (TOR).

It will also help in the identification of newly-enrolled regular beneficiaries of the Livelihood Empowerment against Poverty (LEAP) using the common targeting mechanism, regular update of the Ghana Extractive Industries Transparency Initiative (GHEITI) reconciliation reports on oil and gas and other mining activities and the submission of timely quarterly reports on petroleum receipts.

Sebastien Dessus, Lead Economist for the World Bank in Ghana noted that a series of budget support operations (EGPRC, PRSC7) started in 2009 to support Ghana's macroeconomic stabilization efforts and the development of the oil and gas legal and regulatory framework.

Having regained fiscal space to become a middle income country, Ghana's challenge now is to take full advantage of its current oil-driven economic boom to decisively propel its economy through wise and transformative investments.