A Senior Economist at the University of Ghana, Dr. EboTurkson has asked the new Akufo-Addo-led to consider renegotiating the US$918 million Extended Credit Facility agreement with the IMF.
According to Dr. Turkson, there was the need to revise the macroeconomic targets the erstwhile government agreed with the IMF since they are not attainable in the short-term.
“We missed most of the projections for 2016 in terms of inflations, exchange rate, and deficit spending. So, I think for the 2017 targets we might have to go back to the table and sit down with the IMF and revise the targets.”
Last year, a number of macroeconomic targets were missed as the economy was experienced significant external shocks.
The inflation, exchange rate, deficit and overall GDP growth rates are all set to be missed when the Ghana Statistical service releases its figures later in the year.
“We projected that at the end of this year, the cedi to a dollar is going to be 3.9 but it hit 4.2.We projected that we are going to have a fiscal deficit of 5.2 percent of GDP at the end of 2016, but it is likely that we will hit between 7 and 8 percent of the GDP. That alone will have its own implications on inflation, the growth of the economy and others.
“So once we missed the targets for 2016, then we need to go back to the table with the IMF and see how best we can revise estimates for 2017, otherwise we might not be on the right track,” Dr.Turkson said in an interview with the B&FT.
The overall GDP target (including oil) for 2016 was 5.4 percent; budget deficit was projected to end the year 2016 at 5.3 percent of GDP; and inflation target of 10.1 percent.
However, Dr. Turkson argues that the previous government’s failure to achieve the 2016 targets call for a renegotiation of the macroeconomic targets with the IMF.
Meanwhile, provisional GDP figures released by the Ghana Statistical Service (GSS) shows that the country’s GDP for third quarter of 2016 recorded a growth of 4 percent, indicating that the 5.4 percent target will be missed.
Inflation on the hand, currently stands at 15.5 percent against a target of 10.1 percent, which puts it further from the target.
The IMF is, however, optimistic its three-year agreement with Ghana will not be affected by the change in government.
“It comes at a cost to economic growth if the programme is discontinued. So, who will be interested in undoing what has already been achieved? So, I believe that the government, whoever it is, will continue building on the achievement that has been made in the past two years,” Resident Representative of the Fund, Natalia Koliadina said in December last year.