The report that International Monetary Fund (IMF) says it is focused on helping the government of Ghana to improve its fiscal balances in a sustainable way while protecting the vulnerable and poor dominates the headlines of Ghanaian press on Thursday.
The Graphic reports that the International Monetary Fund (IMF) says it is focused on helping the government of Ghana to improve its fiscal balances in a sustainable way while protecting the vulnerable and poor.
It said the two issues were part of a raft of measures discussed during the first round of discussions on an economic support programme that ended Wednesday (July 13, 2022).
In a statement released by the IMF Mission Chief to Ghana, Carlo Sdralevich, after the eight-day meeting, the fund said the discussions also explored how to ensure credibility of the monetary policy and exchange rate regimes, preserve financial sector stability, and design reforms to enhance growth, create jobs, and strengthen governance.
The statement marked the end of the mission in Accra after it first arrived on July 6 on the request of President Nana Addo Dankwa Akufo-Addo for IMF support to stabilise and revitalise the economy.
The statement added that the team held initial discussions on a comprehensive reform package to restore macroeconomic stability and anchor debt sustainability.
It said the IMF would continue to monitor the economic and social situation closely and engage in the coming weeks with the government on the formulation of their Enhanced Domestic Program that could be supported by an IMF arrangement and with broad stakeholders’ consultation.
“We reaffirm our commitment to support Ghana at this difficult time, consistent with the IMF’s policies.
“Staff express their gratitude to the authorities, civil society, and development partners for their constructive engagement and support during the mission,” it concluded.
The newspaper says that Ghana’s inflation rate surged to 29.8 percent in June from 27.6 percent in May, the Ghana Statistical Service said Wednesday, July 13, 2022.
The inflation rate in June was the highest in almost 19 years (since December 2003) according to Bloomberg data.
The development means inflation has now exceeded the Bank of Ghana’s target band of 6% to 10% for 10 consecutive months.
However, there has been a slowdown in the rate of inflation which saw a decrease for the first time in four months.
The Government Statistician, Professor Samuel Kobina Annim told reporters via Zoom that it was too soon to conclude that inflation that going to drop in the coming months.
He said a downward trend was dependent on the interventions that policymakers would put in place to check the rate of inflation.
“It all depends on how we are going to sustain whatever interventions we are putting in place and counter-inflation, so let’s monitor this closely in the coming months,” Prof. Annim said.
The inflation rate was largely pushed by transport, which saw a 41.6 percent rise in inflation compared to 39.0 percent in May.
The Ghanaian Times reports that the Bank of Ghana will sell a total of $150 million to authorised dealers in the third quarter of this year in a Foreign Exchange Forex Auction.
This will be far lower than the $350 million sold in the second quarter of 2022.
Fifty million dollars each will be sold in July 2022, August 2022 and September 2022 respectively.
In accordance with the Foreign Exchange Forward Auction Guidelines, bids are invited as per the prescribed format to purchase United States dollars against Ghana cedis, separately on each auction date.
The Competitive Multiple-priced Foreign Exchange Forward Auction will be governed by the guidelines published and available on the Bank of Ghana website. Accordingly, the Central Bank will publish an auction calendar for the Foreign Exchange Forward Auction on quarterly basis.
The Ghana cedi lost 16.86 per cent in value to the dollar in the first half of 2022 on the interbank market but over 20 per cent on the retail forex market.
However, the rate of depreciation of the cedi slowed down in the last two months, after stern monetary actions from the Bank of Ghana coupled with some fiscal measures to halt the free fall in the first four months of 2022.
But the local currency ended June 2022 as the second most underperforming currency among 15 top currencies tracked by Databank Research.
The newspaper says that Economist Professor Lord Mensah has stated that the government may be forced by the International Monetary Fund (IMF) to cap Central Bank pre-financing of government’s budget to not more than five per cent of expected revenue in a year.
According to him, the IMF might impose the condition to check the government expenditure and also control inflation.
During the COVID-19 period, the government sought financing from the Bank of Ghana to spend on COVID-19 related expenditure.
Speaking to Joy Business, Prof. Mensah argued that the government might be hit with a conditionality of not seeking central bank financing beyond five per cent of expected revenue as it seeks support from the Fund.
“I think the IMF will look at how we have used pre-financing from the central bank before setting the conditionality of five per cent of expected revenue,” he said.
Reacting to a question whether the Fund could push for zero percent, Prof. Mensah stated that it would be difficult conditionality to enforce since central bank financing played important role in supporting government’s fiscal policies.
Meanwhile, Prof. Mensah had described as apt government’s decision to finish talks with an International Monetary Fund delegation in Ghana before presenting the Mid-Year Budget review in parliament.
According to him, it would be in the right direction to use the mid-year budget to send a clear signal to the investor community concerning government’s intention to chart a new path.
He expressed optimism the IMF’s input would be a good development for the international business community.
The mid-year budget review has been postponed to July 25, 2022.
The Finance Minister, Ken Ofori-Atta, was scheduled to give an update on the first-half year revenue and expenditure estimates on Wednesday, July 13, 2022 but the date was changed due to government ongoing negotiations with the International Monetary Fund for economic support .
This is expected to allow government to possibly make some recommendations to the budget, after the conclusion of the discussions with the visiting IMF team.
GIK/APA