{"id":5408,"date":"2019-10-26T17:09:55","date_gmt":"2019-10-26T17:09:55","guid":{"rendered":"https:\/\/www.africa-press.com\/ghana\/?p=5408"},"modified":"2019-10-26T17:09:55","modified_gmt":"2019-10-26T17:09:55","slug":"imf-advises-ghana-to-avoid-overspending-in-2020-budget","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/ghana\/all-news\/imf-advises-ghana-to-avoid-overspending-in-2020-budget","title":{"rendered":"IMF advises Ghana to avoid overspending in 2020 budget"},"content":{"rendered":"

The International Monetary Fund (IMF) has advised the government to craft and execute its 2020 budget carefully to avoid overspending that can reverse the gains of stabilisation and draw the economy backwards.<\/strong><\/p>\n

Although the IMF praised the government for maintaining macroeconomic stability since 2017, it warned that the 2020 budget must avoid the fiscal excesses that election year budgets had been associated with in recent years.<\/p>\n

In a statement released last Thursday evening after the visit of an IMF Mission to the country, the fund said the 2020 budget must be \u201cappropriately tight\u201d to help \u201climit financing needs, contain debt build-up and support the external position.\u201d<\/p>\n

The statement, which was signed by Mr Carlo Sdralevich, the leader of the mission, said to achieve those tripartite objectives, the government would have to deploy a mixture of revenue enhancing and expenditure reduction measures to help contain the fiscal pressures that the economy was starting to endure.<\/p>\n

The mission analysed prospects for strong and sustained economic growth, including long-term growth targets and structural transformation envisaged under the Ghana Beyond Aid agenda, and the contribution of the financial sector to economic activity.<\/p>\n

Warning<\/p>\n

The fund\u2019s warning on the need to avoid fiscal excesses in next year\u2019s budget comes at a time when the government is concluding preparations of the 2020 budget and economic policy statement which is scheduled to be presented to Parliament on November 14, this year.<\/p>\n

In that budget, the fund recommended that the government \u201cavoids spending and financing operations outside the budget to enhance budget credibility and transparency.<\/p>\n

\u201cIn the medium term, raising domestic revenues remains a priority to create fiscal space and buttress fiscal sustainability.<\/p>\n

\u201cThe authorities should also forge ahead with the implementation of the Energy Sector Recovery Plan to limit contingent liabilities in the energy sector,\u201d the statement said.<\/p>\n

Reversing depressed revenues<\/p>\n

Since 2017, revenue performance has been consistently weak, with the Ghana Revenue Authority (GRA) missing its annual targets in two years in a row.<\/p>\n

Although the authority said last week that it was on course to meeting its 2019 target of GH\u00a245.27 billion (it reportedly collected GH\u00a232 billion as of September), experts fear that the amount could also be elusive.<\/p>\n

Given that lower-than-budgeted revenues results in increased borrowing, the IMF said higher revenue inflows remained a priority.<\/p>\n

Already, the fund said the implementation of the 2019 budget had been challenging, \u201cowing to lower than expected revenues, front-loading of spending on some government flagship programmes, and unexpected security outlays reflecting emerging security challenges from the Sahel region.<\/p>\n

\u201cIn addition, long-standing losses in the energy sector have spilled over to the budget and, together with the cost of the financial sector clean-up, have contributed to the rise of public debt, projected at about 63 per cent of gross domestic product (GDP) by year end,\u201d the statement said.<\/p>\n

Govt\u2019s commitment<\/p>\n

The IMF, however, noted that the government was committed to keeping the budget deficit (excluding financial sector restructuring and energy costs) below five per cent of GDP as well as registering a primary surplus, in line with the Fiscal Responsibility Act.<\/p>\n

It advised further that the government \u201cshould also forge ahead with the implementation of the Energy Sector Recovery Plan to limit contingent liabilities in the energy sector.\u201d<\/p>\n

Monetary tightening<\/p>\n

On the monetary side, the statement said the policy stance appeared appropriate, \u201cbut it should continue to remain vigilant to inflationary risks.<\/p>\n

\u201cTightening may become necessary should inflationary or exchange rate pressures emerge. The central bank\u2019s focus on building external buffers going into 2020 is a welcome development,\u201d it said.<\/p>\n

According to the fund, the Bank of Ghana (BoG) was well advanced in the clean-up of the savings and loans and finance house sub-sectors, which it said was \u201canother important piece in the extensive reform of the financial sector.<\/p>\n

\u201cThe recapitalisation of the remaining locally owned banks and the reduction of the overhang of non-performing loans will be key to boosting credit to the private sector and to buttress growth in non-extractive activities,\u201d it said.<\/p>\n

It added that the new deposit insurance scheme, the ongoing strengthening of regulatory and supervisory regimes, and the work of the Financial Stability Council were also \u201csteps in the right direction.\u201d<\/p>\n

\u201cGoing forward, both robust implementation and deepened accountability remain critical to prevent a recurrence of weaknesses in the financial sector,\u201d it said.<\/p>\n

Persons met<\/p>\n

The IMF Mission, the statement explained, held discussions on part of the 2019 Article IV Consultation, which was concluded in Washington, D.C. during the IMF\/World Bank Annual Meetings.<\/p>\n

It said the team held constructive and candid discussions with Vice-President Dr Muhamudu Bawumia, the Finance Minister, Mr Ken Ofori-Atta, the BoG Governor, Dr Ernest Addison; other senior government officials, the Finance Committee of Parliament, private sector representatives, labour unions and civil society organisations.<\/p>\n

It is expected that the IMF staff would prepare a report based on the preliminary findings of the mission, to be presented to the IMF’s Executive Board for discussion and decision.<\/p>\n","protected":false},"excerpt":{"rendered":"

The International Monetary Fund (IMF) has advised the government to craft and execute its 2020 budget carefully to avoid overspending that can reverse the gains of stabilisation and draw the economy backwards. Although the IMF praised the government for maintaining macroeconomic stability since 2017, it warned that the 2020 budget must avoid the fiscal excesses […]<\/p>\n","protected":false},"author":66,"featured_media":5409,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[3598,3599,3047],"class_list":["post-5408","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-2020-budget","tag-imf-advises-ghana","tag-international-monetary-fund-imf"],"yoast_head":"\nIMF advises Ghana to avoid overspending in 2020 budget - Ghana<\/title>\n<meta name=\"description\" content=\"The International Monetary Fund (IMF) has advised the government to craft and execute its 2020 budget carefully to avoid overspending that can reverse the gains of stabilisation and draw the economy backwards.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/ghana\/all-news\/imf-advises-ghana-to-avoid-overspending-in-2020-budget\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"IMF advises Ghana to avoid overspending in 2020 budget\" \/>\n<meta property=\"og:description\" content=\"The International Monetary Fund (IMF) has advised the government to craft and execute its 2020 budget carefully to avoid overspending that can reverse the gains of stabilisation and draw the economy backwards.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/ghana\/all-news\/imf-advises-ghana-to-avoid-overspending-in-2020-budget\" \/>\n<meta property=\"og:site_name\" content=\"Ghana\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2019-10-26T17:09:55+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/ghana\/2019\/10\/imf-610x391.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"610\" \/>\n\t<meta property=\"og:image:height\" content=\"391\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"francis\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"francis\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/ghana\/all-news\/imf-advises-ghana-to-avoid-overspending-in-2020-budget#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/ghana\/all-news\/imf-advises-ghana-to-avoid-overspending-in-2020-budget\"},\"author\":{\"name\":\"francis\",\"@id\":\"https:\/\/www.africa-press.net\/ghana\/#\/schema\/person\/3687592f7713dc6c826cf5bbd0e55bca\"},\"headline\":\"IMF advises Ghana to avoid overspending in 2020 budget\",\"datePublished\":\"2019-10-26T17:09:55+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/ghana\/all-news\/imf-advises-ghana-to-avoid-overspending-in-2020-budget\"},\"wordCount\":827,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/ghana\/all-news\/imf-advises-ghana-to-avoid-overspending-in-2020-budget#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/ghana\/2019\/10\/imf-610x391.jpg\",\"keywords\":[\"2020 budget\",\"IMF advises Ghana\",\"International Monetary Fund (IMF)\"],\"articleSection\":[\"all news\",\"Economy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/ghana\/all-news\/imf-advises-ghana-to-avoid-overspending-in-2020-budget#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/ghana\/all-news\/imf-advises-ghana-to-avoid-overspending-in-2020-budget\",\"url\":\"https:\/\/www.africa-press.net\/ghana\/all-news\/imf-advises-ghana-to-avoid-overspending-in-2020-budget\",\"name\":\"IMF advises Ghana to avoid overspending in 2020 budget - 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