"IMF \u2018exposes\u2019 government; says debt-to-GDP 78% not 76.1%"

" \n Ghana\u2019s public debt as a percentage of Gross Domestic Product (GDP) according to the International Monetary Fund (IMF) currently stands at 78 percent. \n \n\n \n The figure presented by the IMF in its May 2021 Article IV Consultations paper is in contrast to the 76.1 percent quoted by government official sources such as the Ministry of Finance and the Bank of Ghana (BoG). \n \n\n \n The increment in the country\u2019s debt stock is on the account of the inclusion of some Ghs 7.63 billion costs incurred in the energy sector which was excluded by government in its calculation of the debt stock. \n \n\n \n A method of debt calculation which former Minister for Finance, Seth Terkper, has described as \u201cparallel data reporting\u201d to the IMF and Ghanaians and publicly spoken against it on several occasions. \n \n\n \n \u201cPublic debt rose to 78 percent of GDP in 2020, from 64.4 percent in 2019, including ESLA of GHs7.63 billion in 2020,\u201d noted the IMF. \n \n\n \n The IMF further notes that government fiscal deficit as at the end of 2020 was 15.5 percent. \n \n\n \n \u201cGovernment interventions in 2020 also exacerbated pre-existing fiscal rigidities and public debt vulnerabilities. The government deficit, including energy and financial sector costs, reached 15.5 percent of GDP,\u201d noted the IMF. \n \n\n \n This is also in contrast to the 11.7 percent fiscal deficit quoted by government in the 2021 budget statement \u2013 Although government has made it clear that the 11.7 percent deficit excludes the energy and financial sector costs incurred in 2020, it has failed to provide the total deficit incurred in 2020. \n \n\n \n Touching on the Covid-19 situation in the country, the IMF Staff Mission led by Carlo Sdralevich which assessed Ghana\u2019s economy to which effect the Article IV Consultations paper was issued, praised government\u2019s efforts in effectively managing the Covid-19 pandemic. \n \n\n \n \u201cGhana has managed very effectively the COVID-19 outbreak in the country, and thus succeeded in protecting lives. Almost 93,000 cases have been confirmed, and unfortunately 780 people have died as of today. The launch of mass vaccine rollout has been a breakthrough, with the administration of approximatively a million doses as of end-May,\u201d Mr Sdralevich noted. \n \n\n \n \u201cPolicy interventions in 2020 were critical to safeguard livelihoods and paved the way for a faster rebound of economic activity,\u201d he added. \n \n\n \n Read below details of the IMF\u2019s Article IV Consultation Paper: \n \n\n \n An International Monetary Fund (IMF) mission led by Carlo Sdralevich held consultations under the Article IV during April 28 \u2013 May 12, 2021 through virtual meetings. At the conclusion of the mission, Mr. Sdralevich issued the following statement: \n \n\n \n \u201cGhana has managed very effectively the COVID-19 outbreak in the country, and thus succeeded in protecting lives. Almost 93,000 cases have been confirmed, and unfortunately 780 people have died as of today. The launch of mass vaccine rollout has been a breakthrough, with the administration of approximatively a million doses as of end-May. \n \n\n \n \u201cThe impact of the pandemic on the economy has been severe. Real GDP growth slowed to 0.4 percent in 2020 from 6.5 percent in 2019, due to lower activity in the extractive industries and a collapse in hospitality and retail services, including the informal sector that especially employs female workers. Inflation spiked to double digit because of food price pressures, before falling to 8.5 percent in April 2021. \n \n\n \n \u201cPolicy interventions in 2020 were also critical to safeguard livelihoods and paved the way for a faster rebound of economic activity. Real GDP growth is projected at 4.8 percent in 2021, driven by a rebound in mining and services. Inflation is expected to remain around the central bank\u2019s target of 8 percent by end-2021. The CARES program has the potential to be transformative and inclusive for the Ghanaian economy, buttressed by its emphasis on SMEs and digitalization as well as leveraging the AfCFTA. \n \n\n \n \u201cGovernment interventions in 2020 also exacerbated pre-existing fiscal rigidities and public debt vulnerabilities. The government deficit, including energy and financial sector costs, reached 15.5 percent of GDP, while annual gross financing needs exceeded 20 percent of GDP. Public debt rose to 78 percent of GDP in 2020, from 64.4 percent in 2019, including ESLA of GHs7.63 billion in 2020. \n \n\n \n \u201cThe 2021 budget\u2019s recent policy pivot towards fiscal consolidation is an important step in the right direction and a difficult one in a pandemic. Fiscal consolidation should be deepened and anchored around debt and debt service reduction to create space for social, health, and development spending. \n \n\n \n \u201cGiven the social and equity implications, fiscal consolidation should rely more on progressive revenue and spending measures, while guaranteeing fiscal support to the most vulnerable and social safety nets. \n \n\n \n \u201cDespite progress in rationalizing power generation, the financial viability of the energy sector affects people\u2019s daily life and will remain a drag on productivity and a driver of public debt if not addressed decisively. Improving efficiency and collections remains a priority to achieve substantial savings. \n \n\n \n \u201cThe planned audits of COVID-19 emergency spending and of arrears accumulated in 2020\u2014in addition to routine budgetary reporting practices\u2014are welcome as they will help account for the increase of spending and its effectiveness, and provide lessons to improve the robustness of Public Financial Management systems. \n \n\n \n \u201cThe team had collaborative and constructive discussions with Vice President Bawumia, Finance Minister Ofori-Atta, Governor Addison of the Bank of Ghana, other senior government officials, Finance Committee of Parliament, private sector representatives, and civil society organizations.\u201d \n "

"IMF \u2018exposes\u2019 government; says debt-to-GDP 78% not 76.1%"

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