IMF programme renegotiation will be guided by plans to reset economy – Terkper

Former Minister of Finance Seth Terkper has revealed that President-elect John Mahama’s proposals to renegotiate the International Monetary Fund (IMF) programme will be guided by plans to reset the economy and make it more relevant to current challenges facing the country.

“Our plans to re-negotiate have also been influenced by the current state of the economy and how the John Mahama administration wants to fast-track measures to fully stabilize the economy”, he said.

He said the re-negotiations will likely cover issues around the Primary Balance of the country, and the processes for accounting for it.

He added that the government will take a relook at the country’s debt situation and pursue “smart borrowing” to finance expensive debts and other financial commitments.

“When you look at the current debt situation and the expected payments from 2025, the incoming NDC government has to explore innovative ways to finance these debts”, he said.

He stated that the review will also look at some of the key benchmarks under the programme and the fiscal consolidation measures being implemented.
Background

President-elect John Mahama during a recent meeting with the United Nations Resident Coordinator Charles Abani revealed that his administration will press ahead to review Ghana’s Programme with the IMF and the World Bank.

According to the President-elect, the review is to ensure that the programme is aligned with the country’s current needs.

“This adjustment is crucial and will help put the new government that would be inaugurated next year on the same springboard with our development partners to begin the rebuilding of the economy and the country,” Mr Mahama stated.

Ghana is currently under a 36-month, $3 billion Extended Credit Facility with the IMF and has also signed several agreements with the World Bank, including a $250 million Ghana Financial Stability Project and another $250 million for the Ghana Energy Sector Recovery Programme.

Dealing with Investor concerns

Mr Terkper rejected the notion that the decision to go for a renegotiation could result in some negative investor reaction, a development that could hurt the economy badly.

“We have done our engagements and are still engaging these investors on their concerns that will be factored in these re-negotiations”, he assured.

Mr Terkper disclosed that the Mahama team has already engaged development partners on this issue, hence the country will not suffer as a result of the move.

“This is one of the reasons why we are holding a National Consultative Forum on the Economy and all these concerns, including re-negotiating the IMF programme will be discussed as well”.

Proposed tax cuts

President-elect Mahama has promised to remove some taxes. Key among them are the E-levy, the COVID Levy, the 10 per cent betting tax and the Emissions Levy.

Checks show that the COVID-19 levy brings some GH₵13.91 every year while E-Levy brings some GH₵8.27 and the Betting Tax some GH₵5.1.

Mr Terkper maintained that the team has taken measures to ensure the expected shocks are managed and do not impact badly on the economy.

“We should not forget that all the taxes are put together. It’s about 5 percent of Ghana’s Gross Domestic Product and we can find alternatives to this. We are planning to make sure that the projects will be self-financing, this other will ensure that the economy will not suffer”, he said.