Ghana Needs More Policy Tightening – IMF

Ghana Needs More Policy Tightening – IMF

The International Monetary Fund has recommended that Ghana make additional efforts to tighten projected 2011 budget outturn.

Head of a review team of IMF's latest mission to the West African country, Mr. Peter Allum, said despite significant improvement in macro indicators, policy tightening may be needed in 2011.

“Risks to inflation have shifted to the upside, reflecting rising demand pressures, global commodity prices and easing domestic liquidity,” Allum said at the end of review meetings with government officials including the central bank.

Benchmark policy

At the end of a review meeting mid-February, the bank's monetary policy committee held the benchmark policy rate at 13.5 per cent for a third time, citing potential pressures.

On budget policy, Allum said it was necessary to limit near-term financing needs and to put the budget on a sound footing over the medium term.

Wage bill

Commenting on concerns expressed by the Fund last year about the size of Ghana's current wage bill following the introduction of a new public sector pay policy, Allum said that although the government showed some commitment to reduce its effect on the economy, there were still uncertainties.

“There are still some uncertainties around the size of the wage bill and this forms part of our continued discussions with the government,” he said.  

At the end of its review mission in October last year, the IMF had urged Ghana , which has joined the club of oil-producing nations, to improve its fiscal performance and avoid an unsustainable build-up of public debt.

Reuters/NAN/Margaret/Yinka