Ghana's economy Economist warns of economic challenges over failure to meet IMF conditions

Ghana in 2015 reached a three-year $918 million financial package with the IMF to support a reform programme aimed at faster growth and job creation while protecting social spending.

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Economist Joe Abbey is warning of dire consequences for the economy over government failure to meet a key tenet of its $918 million aid deal with the International Monetary Fund (IMF).

The deal, clinched in 2015, is aimed at tighter fiscal discipline, stronger public finances and lower inflation as well as job creation while protecting social spending.

Parliament this month rejected a key condition that would prevent the government from borrowing from the central bank.

It adopted a motion that said the Bank of Ghana can finance the budget deficit up to 5 percent.

"The worry some of us have which is part of the reason we've been quite is that there can be very serious implications for investors if the fund [IMF] is to say sorry, 'we are unable to get the approval of senior management to take a clear recommendation to our board,'"he told Joy FM.

"The yield on your eurobond may take a hit because whether we like to acknowledge it or not these financial market take the IMF assessments very serious. To the extent that failure could raise cost of our borrowing to us."

He said Ghanaians should be worried about the progress the nation is making with respect to the IMF programme instead of suggestions by some economists for it to be abandoned.

The IMF board rescheduled its July meeting to discuss the release of the third tranche to August due to ‘outstanding issues.”

However, last information indicates that the August meeting has also been postponed, a sign that Fund is not happy with government handling of the aid package.

Despite the concerns of the IMF, President John Mahama has said the country will come out of aid package with a robust economy with single digit inflation.

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