Statement by the IMF Staff Representative

This paper examines Ghana’s Fourth Review Under the Poverty Reduction and Growth Facility and Requests for Waiver of Performance Criteria and for Extension of the Commitment Period. Most end-August 2001 quantitative performance criteria were met, but waivers are requested for nonobservance of two structural performance criteria and the ceilings on short-term official external debt and the stock of arrears in the road sector. The authorities’ program for 2002 seeks to consolidate on the macroeconomic gains of 2001, accelerate structural reforms, and create the conditions for faster growth and poverty reduction.

Abstract

This paper examines Ghana’s Fourth Review Under the Poverty Reduction and Growth Facility and Requests for Waiver of Performance Criteria and for Extension of the Commitment Period. Most end-August 2001 quantitative performance criteria were met, but waivers are requested for nonobservance of two structural performance criteria and the ceilings on short-term official external debt and the stock of arrears in the road sector. The authorities’ program for 2002 seeks to consolidate on the macroeconomic gains of 2001, accelerate structural reforms, and create the conditions for faster growth and poverty reduction.

1. A number of prior actions for the fourth review of Ghana’s arrangement under the Poverty Reduction and Growth Facility were specified in EBS/02/16, Appendix I, Attachment 1, Table 1.2.

2. The Ghanaian authorities informed the staff on February 15, 2002, that all of the prior actions had been implemented:

  • Specific duties averaging ¢200 per liter were imposed on petroleum on October 31, 2001.

  • Disaggregated expenditure ceilings for the first quarter of 2002, consistent with the program’s fiscal targets, were issued to ministries, departments, and agencies (MDAs) on January 7, 2002.

  • CAGD reports were provided for the months of January-October 2001 on aggregate budget outcomes and MDAs’ expenditure commitments and cash outlays, showing deviations from the established quarterly ceilings and accumulated arrears.

  • Audits at the MDA level of the full stock of domestic expenditure arrears for January-August 2001 were completed on January 16, 2002. These arrears, which totalled ¢146 billion, will be liquidated in full in 2002.

  • On January 30, 2002, Cabinet approved revenue measures with a combined yield of ¢115 billion in 2002, for implementation with the 2002 Budget. These measures comprised: the application of a 5 percent import duty to a set of major product lines that are currently zero-rated; a 1 percent processing fee on all remaining zero-rated items and on items attracting a concessionary rate; the introduction of a 10 percent withholding tax on rental income; and a restructuring of the lottery sector to increase the proceeds flowing to the budget.

  • The external financial audit of the Bank of Ghana began on December 31, 2001.

Ghana: Fourth Review Under the Poverty Reduction and Growth Facility, Requests for Waiver of Performance Criteria and for Extension of the Commitment Period
Author: International Monetary Fund