News Brief No. 02/15

News Brief: IMF Completes Fourth Review Under the PRGF Arrangement for Ghana and Approves US$65 Million Disbursement

February 22, 2002

The Executive Board of the International Monetary Fund (IMF) today completed the fourth review under the Poverty Reduction and Growth Facility (PRGF) arrangement for Ghana. The Board also approved the authorities' request for an extension of the arrangement period, due to expire on May 2, 2002, to November 30, 2002.

The completion of the fourth review releases immediately a disbursement of an amount equivalent to SDR 52.58 million (about US$65 million) under the PRGF arrangement (see Press Release No. 99/16).

After the Executive Board's discussion on Ghana, Mr. Eduardo Aninat, Deputy Managing Director and Acting Chairman, made the following statement:

"The new government of Ghana made significant progress during 2001 in stabilizing the economy and restoring the conditions for economic growth and poverty reduction. Inflation was cut substantially, the exchange rate stabilized, and public finances were contained, although domestic payment arrears continued to emerge. Progress on the structural front was more limited, but important measures were implemented with respect to petroleum pricing, restructuring of the Tema Oil Refinery debt to the banking sector, preparation of a strategy for moving towards full-cost recovery for utilities, and strengthened independence of the central bank. Preparation of a full Poverty Reduction Strategy Paper (PRSP), involving all stakeholders is proceeding satisfactorily, with completion expected in the first half of 2002.

"Most of the performance criteria under the 2001 program were met, and the authorities have taken adequate steps to maintain the program's current and future objectives. Accordingly, the Fund decided to grant waivers for the nonobservance of a few performance criteria, and to extend the current arrangement until November 30, 2002.

"Passage of a 2002 budget is expected to consolidate stabilization gains and to lay the foundation for continued recovery and an acceleration in poverty reduction. To achieve this objective, the authorities are planning new measures to boost revenue and to place public finances on a permanently sound footing. On the expenditure side, vigorous implementation of the planned improvements to the public expenditure management system will be essential, in order to ensure that budgetary allocations are respected and that fiscal resources, including those freed up through debt relief under the enhanced HIPC Initiative, are used effectively.

"The structural reform program focuses on divestiture of key public enterprises, the launch of utility price reforms intended to prevent a recurrence of the large build-up of public enterprise debt, measures to improve tax administration, and reform of the foreign exchange market.

"A final decision on Ghana's debt relief under the enhanced HIPC Initiative is pending action next week by the World Bank's Executive Board. A press release will be issued jointly with the World Bank following those deliberations," Mr. Aninat said.