Economy of Ghana - IMF Support

IMF Support

Since an initial August 1983 IMF standby agreement, the economic recovery program has been supported by three IMF standbys and two other credits totaling $611 million, $1.1 billion from the World Bank, and hundreds of millions of dollars more from other donors. In November 1987, the IMF approved a $318-million, 3-year extended fund facility. The second phase (1987–90) of the recovery program concentrated on economic restructuring and revitalizing social services. The third phase, focused on financial transparency and macroeconomic stability is scheduled for March 1998.

Ghana intends to achieve its goals of accelerated economic growth, improved quality of life for all Ghanaians, and reduced poverty through macroeconomic stability, higher private investment, broad-based social and rural development, as well as direct poverty-alleviation efforts. These plans are fully supported by the international donor community and have been forcefully reiterated in the 1995 government report, Ghana: Vision 2020. Privatization of state-owned enterprises continues, with about two-thirds of 300 parastatal enterprises sold to private owners. Other reforms adopted under the government's structural adjustment program include the elimination of exchange rate controls and the lifting of virtually all restrictions on imports. The establishment of an interbank foreign exchange market has greatly expanded access to foreign exchange.

The medium-term macroeconomic forecast assumes political stability, successful economic stabilization, and the implementation of a policy agenda for private sector growth, and adequate public spending on social services and rural infrastructure. The ninth Consultative Group Meeting for Ghana ended 5 November 1997 after deliberations in Paris. Twenty-four countries and donor entities were represented at this meeting called by the World Bank on behalf of the Ghanaian Government. The World Bank announced that, of the targeted disbursement level of $1.6 billion sought from the donor community for 1998-99, they foresaw only a $150 million shortfall in commitments, and that this shortfall would be easily realized should Ghana rapidly enact its macroeconomic program.

The government repealed a 17% value-added tax (VAT) shortly after its introduction in 1995, which resulted in widespread public protests. The government reverted to several previously imposed taxes, including a sales tax. The government has set in motion a program to reintroduce a VAT bill, with implementation in 1998 after an extensive public education campaign.