IMF warns gov’t over high expenditure projects
The International Monetary Fund (IMF) has expressed worry over the high expenditure programs being pursued by the government.
According to the fund, even though the Akufo-Addo government
promised to save money, the nature of the projects it is embarking on
makes it difficult to live up to the promise.
The Fund is, therefore, suggesting that government is not allowed to
borrow from the Bank of Ghana, except on an emergency basis.
“The IMF recognizes the recently issued energy bond as public debt and insists that the government classifies it as such.
“The IMF considers it a misplaced priority to be working towards
reducing the indebtedness of State Owned Enterprises without first
addressing the causal factors responsible for their indebtedness.
“In the view of the IMF, the government should have issued a “Vanilla bond”, not a bond through a Special Purpose Vehicle (SPV).
“IMF does not support massive injection of liquidity into the sector
to address debt situation. It believes that a better approach would be
to release the liquidity in tranches,” the IMF said in a document
compiled after a meeting between the IMF mission to Ghana and the Civil
Society Platform on the IMF program.
It added: “ The fund is concerned that while on the one hand
government has passed the Earmarked Funds capping and Realignment Act,
ostensibly to create fiscal space, on the other, the government has
chosen to embark on a series of high expenditure projects, a move which
appears to defeat of EFCRA”.
The Akufo-Addo government has among other things promised to
construct at least, a factory in every district across the country and
also provide one million cedis to every constituency for local
development. It has already started the implementation of its major
campaign promise of providing free secondary school education for all
eligible Ghanaians.
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