Minister of Finance Dr. Cassiel Ato Forson has indicated that Ghana’s decision to transition to a Policy Coordination Instrument (PCI) with the IMF after successfully completing its Extended Credit Facility (ECF) bailout programme is the need to signal to investors that the stabilisation is permanent.
Speaking in an interview with Bloomberg, the Finance Minister explained that the transition to the PCI is to earn the stamp of credibility that reassures the global investor community that Ghana’s economic gains are sustainable and that the country is open for business.
“Some investors are sceptical, we need to remove that concern, and in doing so, we need to walk them through a path of credibility, and we believe that though we have successfully recovered the economy and stabilised it, there’s the need to send a signal that this stabilisation is here to stay, and we’re going to sustain that.”He stated
On the reforms, Dr. Cassiel Ato Forson, disclosed that government is pursuing a reform agenda for SOEs in collaboration with the IMF, drawing on international best practices and country perspectives to ensure the reforms are comprehensive and effective to address the problem of SOEs adding approximately 2.5% of GDP in additional debt to the country’s public debt burden .
“For example, the state-owned enterprises. We have identified the fact that SOEs in particular have accounted for adding about 2.5% of GDP, additional debt, to the countries that pay.
And so what do we do to tackle this SOEs debt accumulation? And the fact that stock flow adjustment has been the major driver of public debt. First, we need to reform these SOEs, and some of the reforms that we need to go through, we need to do it together with the fund, bring the country perspective, other countries and what we can do together to reform the SOEs.” he added
The Finance Minister also flagged the energy sector as a critical area for reform, revealing that government currently spends an average of $1.5 billion to $2 billion annually to support the sector. Dr. Forson stressed the need to eliminate or significantly reduce this expenditure, arguing that redirecting those funds to other critical sectors of the economy would go a long way in accelerating Ghana’s development agenda.
“The energy sector today, the government of Ghana spent an average $1.5 billion, close to $2 billion USD to support the energy sector. We need to reform that. We need to make sure that going into the future, we can remove that $2 billion USD, and if you can reduce it to the barest minimum, that amount of money can also go a long way to other critical sectors of the economy.” He disclosed
His comments follows Ghana’s official exit from the IMF following its conclusion of its $3 billion ECF program with the Fund hence transitioning to a non-financial PCI to lock in economic reforms without taking on new loans.
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