IMF Conditionality Series: Gov’t tasked to approve State Ownership Policy on SOEs by end-June 2023
As part of the conditions tied to the $3 billion IMF program, the International Monetary Fund (IMF) Board has called upon the Ghanaian government to approve a state ownership policy and its related guidelines by the end of June 2023. The responsibility for developing and submitting these guidelines lies with the Ministers responsible for Finance and Public Enterprises.
The primary objective of the state ownership policy is to bolster the competitiveness and efficiency of state-owned enterprises (SOEs) by implementing measures aimed at reforming their management and monitoring systems, ultimately fostering greater competition and operational efficiency.
According to the IMF, the state ownership policy and guidelines will encompass several key components. These include a clearly articulated rationale, objectives, and guiding principles of state ownership, defining the roles and responsibilities of shareholders, boards, and management within SOEs. It will also outline reporting and disclosure requirements, establish a performance monitoring system, address fiscal relations between the government and SOEs (such as financing, dividend payments, and quasi-fiscal activities), provide a framework for the remuneration of board members and executive management of SOEs, and outline a framework for the appointment of board members and executive management based on technical capacity and sectoral expertise. Additionally, the policy will incorporate a cap on salary adjustments for SOE employees, ensuring they remain lower than negotiated base pay increases on the Single Spine Salary Structure for each year.
The IMF has identified several risks that Ghana may face in its endeavor to strengthen the competitiveness and efficiency of SOEs. These risks include resistance to change, lack of capacity, and potential unintended consequences of the reforms. Failure to achieve the desired level of competition and efficiency in SOEs could undermine the effectiveness of the proposed reforms.
The state ownership policy and its related guidelines represent a crucial component of the broader structural reforms that Ghana seeks to implement as part of the IMF program. These reforms aim to revitalize the Ghanaian economy and lay the foundation for sustainable economic growth and development.
The demand for a state ownership policy reflects the IMF’s recognition of the importance of efficient and well-managed SOEs in driving economic growth and promoting a favorable business environment. By establishing clear guidelines and principles for state ownership, Ghana aims to enhance the overall performance and competitiveness of its SOEs, thereby contributing to the country’s economic transformation and attracting greater investment.
However, the successful implementation of these reforms will require strong commitment and collaboration between the government, relevant ministries, and stakeholders involved in the management and oversight of SOEs. It will also necessitate effective coordination and cooperation between various agencies and regulatory bodies to ensure adherence to the outlined guidelines and principles.
The IMF program’s emphasis on state ownership policy underscores the significance of good governance, transparency, and accountability in the management of public assets. By adopting and implementing robust policies and guidelines, Ghana can strive towards a more efficient and effective public sector, leading to improved service delivery, increased investor confidence, and ultimately, sustainable economic growth.
As Ghana moves forward with the development and approval of the state ownership policy and its related guidelines, it is expected that the government will engage in comprehensive consultations with relevant stakeholders, including representatives from the private sector, civil society, and the academic community. This collaborative approach will ensure that the final policy framework reflects the diverse perspectives and addresses the specific challenges faced by SOEs in Ghana.
The IMF’s demand for a state ownership policy in Ghana signals a significant step towards strengthening the competitiveness and efficiency of SOEs. As Ghana embraces this opportunity for reform, the successful implementation of the policy will require concerted efforts, effective coordination, and a commitment to good governance. By prioritizing the development and adoption of robust guidelines, Ghana can pave the way for a more dynamic and prosperous future, characterized by enhanced competitiveness, improved public sector performance, and sustained economic development.
