Daniel Nonor
3 July 2009
The Minister of Finance and Economic Planning, Dr. Kwabena Duffuor, has indicated that the worst was over for the country's ailing economy, with the approval of the US$535 million by the World Bank.
The facility is a balance of payment support, and the first set of credits of US$1.2 billion the bank plans to support the Government of Ghana with, over the next three years.
When approved by Parliament, the facility would be the largest credit facility the country has received from the Bretton Woods institutions and without conditionalities.
The Minister argued that Ghana was making great strides in its economic recovery programme, and thus the facility was an acknowledgment by the World Bank of the commitment of government at managing the economy.
He hinted that a $1 billion credit facility was also underway by the International Monetary Fund.
"These resources could not have come at a better time. We have been working hard to minimise the impact of the global financial crunch on our people, and these facilities will go a long way in supplementing our internal revenue generation and poverty reduction efforts. It is our duty as a government to bring the macroeconomic situation back on track, and we are committed to implementing appropriate measures in this regard," he noted.
Ghana is currently nursing a fiscal deficit of 14.9 per cent, which the National Democratic Congress (NDC) government hopes to reduce to 9.4 per cent in its first year of administration.
Speaking on City FM's Morning Show yesterday, Dr. Duffuor said although there were concerns for Ghana to strive at weaning itself from the World Bank and the other Bretton Woods institutions, he found nothing wrong if Ghana could access a cheaper loan from these institutions, especially at a time when the country's economic standing depends largely on the World Bank and other donor institutions.
The World Bank, in its statement on the approval of the loan, stated that the facility was to help offset the challenges in its macro-economy, brought about by a combination of domestic and external shocks (fuel and food crisis, droughts and floods in the North, financial crisis and global slowdown), which revealed and exacerbated a number of structural challenges in the public sector in general, and in the energy sector in particular, and which, if left un-tackled, would undermine Ghana's growth and development prospects.
An Economic Governance and Poverty Reduction Credit (EGPRC), which absorbs $300 million of the facility, is a budget support operation, which aims to assist Ghana's efforts to bring the fiscal situation back on a sound and sustainable track, while protecting the development objectives set forth in Ghana's Second Growth and Poverty Reduction Strategy (GPRS II) for the period 2006-2009.
The credit will be disbursed in two tranches. The first tranche of US$150 million will be affected immediately the financing agreement is signed by the government and the World Bank in early July 2009.
The second will take place in the third quarter of 2009, immediately after the Government has completed the actions it has committed to take.
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