IMF: Ghana needs to improve revenue collection

12 Mar 18

Ghana should improve revenue collection and reduce spending cuts to achieve fiscal targets, the International Monetary Fund has said.

The Washington-based lender told the country to legislate new measures to boost revenues by at least 0.5% of gross domestic product before it reviews a $918m credit deal next month.

The west African country should also outline plans to clean up the financial sector and show commitment to cut debt, including limiting its next Eurobond for budget support to $500m, the IMF said in a document seen by Reuters.

IMF country representative Natalia Koliadina told reporters: “Fiscal consolidation has to be revenue-based. Further spending cuts are not sustainable as government capital spending is already low at 3% of gross domestic product.”

Under the plan between the IMF and Ghana, the country has committed to implementing reforms to tackle overspending and improve economic governance.

Although Ghana missed its revenue target for 2017, it met fiscal-consolidation goals, with the budget deficit declining to 5.9% of GDP, Koliadina said.

A positive outcome of the IMF review could lead to the IMF disbursing $190m to Ghana, she said.

Ghana’s finance minister said last week the government planned to issue up to $2bn of sovereign issuance by June to pay down debt that hit 68.7% of GDP last November and help finance the 2018 budget.

The country is in its final year of the IMF programme, designed to stabilise an economy hit by high inflation and debt, and low growth. Ghana exports cocoa, gold and oil.

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