The IMF, World Bank and IFC will always be diplomatic especially when it comes to country local politics. They never want to take sides. So you will likely never get a straight YES or NO answer to straight questions that have bearing on local politics. You can only infer such answers from official communication either in interviews or reports by these Bretton Wood institutions.
Dr. Albert Mama (IMF country rep) was right when he said on Newsfile on Joy News that the macroeconomic numbers presented by Ghana to the Fund for the RCF request were not new.
In paragraph 5 of the Letter of Intent written by Ken Ofori Atta to the IMF requesting for the Rapid Credit Facility (RCF), he states that COVID-19 pandemic will push government deficit (excluding energy and financial sector costs) to 6.6% of GDP in 2020 compared to 4.7% of GDP targeted by the 2020 Budget. The 2018 and 2019 Budgets put the deficit at 3% and 4.5% of GDP. Other indicators are also stated in the Report.
So the questions are; In the Press Release; Staff Report; and Statement by the Executive Director for Ghana approving our request for disbursement under the RCF,
- Did the IMF agree and use the government fiscal figures, i.e, deficit and Gross International Reserve figures?
- Did the IMF agree with Ghana’s standard/method of reporting the fiscal figures?
iii. What different figures, if any, (actual, estimated or projected) did the IMF consider in their analysis of Ghana’s economy and ability to repay? Don’t forget the Public and External Sector Debt Sustainability Analysis approved by Marcelo Estevao (IDA) and Mark Flanagan (IMF) in the report says Ghana’s overall risk of debt distress is High.
From the tables below, it’s clear the IMF’s own computations of our Gross International Reserves (GIR) and overall balance positions are different from what we submitted to Parliament in the Budgets and full year fiscal figures. The IMF tables however acknowledge our own figures. The footnotes in both tables explain why the difference exist. While Ghana did not add the energy and financial sector costs, the IMF included them in their computations for the overall deficit. Ghana also included foreign encumbered assets and oil funds while the IMF excludes them in arriving at our GIR.
The IMF did not agree with our reporting of these indicators. In the words of Dr. Mama, we can agree to disagree. As a matter of fact, the IMF’s 2019 Article IV Consultation and Staff Report explains why they don’t agree with us;
“Best international practice would include these transactions above the line, as they reflect either direct government obligations or government transfers to SOEs. In addition, spending on roads (Cocobod) and potentially infrastructure collateralized on bauxite (Sinohydro) should be recorded in the central government budget.” The report further says that “off-budget operations, including ESLA, Sinohydro and GETFUND, contribute to public debt but their decentralized and not always transparent nature complicates oversight and management of public financing, raising the scope for corruption.”
Hence, the IMF’s analyses of Ghana’s economic situation before approving the RCF request as indicated in the Staff Report and Statement by Executive Director for Ghana took into consideration energy and financial sector costs, items which Ghana treated below the line. For the IMF, our overall balance positions are (7%) for 2018, (7.5%) for 2019 and (9.5%) for 2020 (projection). This is different from what we’ve reported in our budgets. It is also different from our full year deficit figures of 3.9% and 4.8% for 2018 and 2019 respectively. Same is true for our GIR.
These differences are important because they impact on many fronts. They affect our debt sustainability and risk of debt distress analyses. The different figures and reporting methodology also affect our outlook. So we may not be doing so well, as the case is, but the figures present a good picture of a healthy economy. This also impacts on the local political partisan debates on who is a better manager of the economy as the true state of the economy is not captured.
Did Ghana present different set of figures to the IMF and Parliament of Ghana? Honestly we did not. The different macroeconomic figures were generated by the IMF. What we did was report our figures differently. This reduced our deficit position while increasing our GIR position. So make the decision for yourselves, is it right to exclude energy and financial sector costs from computing your overall balance? These are debts we will pay nonetheless. Is it right for the BOG to include encumbered foreign assets and oil funds, funds that are not readily available, in arriving at our Gross International Reserves? My answer is no. We must report fully, our true position.
The views in this write up are entirely those of the author. They do not represent the World Bank Group or any institution where he works or has ever worked or may work one day.
The writer is an Economist and Environmental and Social Risk Management Consultant