World Bank warns of potential funding cuts for Ghana’s social intervention programmes
World Bank Country Director Pierre Laporte has issued a warning to the Government, indicating that the institution may be compelled to reduce or reassess its funding for some of the country’s social intervention programs.
Laporte made it clear that such measures could be implemented if the proposed reforms are not adequately incorporated into the ongoing review of Ghana’s policies by the International Monetary Fund (IMF). Speaking on the PM Express Business Edition on June 1, 2023, Laporte emphasized that funds allocated for specific projects cannot simply be returned to the World Bank.
Laporte elaborated, stating, “We will explore the possibility of reallocating the funds to another project within Ghana. At the country office level, we do not send funds back to Washington, D.C., USA. Instead, we will transfer the money to a pool dedicated to the country.”
Accountability emerged as a critical theme during the discussion, with Laporte emphasizing the importance of utilizing World Bank funds for their intended purposes. He noted that ongoing conversations have taken place between the World Bank and the Ministry of Finance, as well as local government officials, regarding the School Feeding Programme. Transparency and fairness were highlighted as key factors for the successful execution of the project.
However, Laporte issued a warning that failure to implement the proposed reforms could lead to the redirection of funds to other projects within the country. He stressed that these disbursements are specifically allocated to benefit Ghana. Moreover, he underscored the significance of addressing challenges related to governance, accountability, and fairness, arguing that programs such as the Free SHS (Senior High School) program and the School Feeding Program should undergo review. The World Bank has already put forward some proposals in this regard.
The Ghanaian government has acknowledged the ongoing review of its social intervention programs. The IMF’s staff report highlighted concerns about the implementation processes of these programs, prompting the need for scrutiny and potential adjustments.
Laporte commended Ghana for its decision to seek assistance from the IMF, expressing his belief that adhering to the proposed reforms under the program would facilitate the much-needed economic recovery. He advised the government to fully engage in the program by making the necessary difficult decisions. Analyzing the IMF program, Laporte expressed confidence in its potential to restructure the Ghanaian economy effectively, provided it is implemented in its entirety.
Addressing the challenges within Ghana’s energy sector, Laporte expressed disappointment that the government has not accessed a $300 million facility intended to provide technical support in this area. He raised concerns regarding the implementation of power purchase agreements, particularly the “take or pay” provisions, emphasizing the need for corrective action.
Laporte highlighted the substantial burden on the government, with the energy sector costing over ¢1 billion while revenue collection remains poor. He attributed the power sector’s challenges, in part, to recent tariff increases, noting that Ghana is currently selling power to consumers below production costs, resulting in financial strain.
The World Bank’s warnings and insights into Ghana’s social intervention programs and energy sector underscore the importance of robust reforms, transparency, and accountability. The government now faces the critical task of effectively implementing the proposed measures to secure continued support from international financial institutions and pave the way for sustainable economic recovery.
