Economic management post-IMF bailout,Let’s build consensus — Ken Ofori-Atta

The Finance Minister, Mr Ken Ofori-Atta, has said there is the need for the country to build strong consensus on how to sustain the gains it has made in its economy so far and will be made in the future.

Basing his call on the successful implementation of prudent economic policies that had now seen Ghana exiting from the International Monetary Fund’s (IMF’s) Extended Credit Facility (ECF) programme, the raising of the $3-billion Eurobond at a lower coupon rate, among many other things, the Finance Minister said “Ghana is doing something right and it is time we all pulled in one direction”.

Mr Ofori-Atta was in Parliament yesterday to address the House on the formal completion of the country’s ECF programme with the IMF, the historic $3-billion Eurobond issuance, recent developments on the foreign exchange market, as well as the visit of the World Bank Vice-President for Africa to Ghana.

“In the spate of one week, we saw a $21-billion rush for our Eurobond, we successfully concluded the IMF programme and we are experiencing an impressive recovery of the Ghana cedi, ending the World Bank doubling what it had intended to support us with,” he said.

The Finance Minister said the government was committed to continuing with the disciplined, competent and compassionate management of the Ghanaian economy.

“We are doing so by also protecting the public purse,” he added, amid cheers from the Majority side and boos from the Minority side.

He said the completion of the ECF programme, notwithstanding, Ghana still remained a member in good standing with the IMF and would continue its productive policy and technical collaboration, adding that Ghana had choices to ensure positive engagement with the fund as a trusted advisor.

“Mr Speaker, this successful completion immediately made available to Ghana about $185.2 million and this brings the cumulative disbursement under the ECF-supported arrangement to $934.4 million,” he said.

Mr Ofori-Atta asserted that while it was evident that significant microfinance gains had been achieved over the course of the ECF programme, some challenges still remained and that to ensure irreversibility, there was the need to maintain fiscal discipline and avoid budget expenditure and fiscal dominance.

He told the House that the codification of policies into laws and systems to promote fiscal discipline and debt sustainability and sanction offenders provided a strong platform to safeguard the gains chalked up so far.

Eurobond issuance

Mr Ofori-Atta told Parliament that Ghana priced a $3-billion tri-tranche bond with a weighted average of seven, 12 and 31 years, saying that was the first time Ghana had done a tri-tranche issuance and the final order book, which closed at $17.2 billion, was the highest book achieved in sub-Saharan Africa.

He said the transaction was incredibly beneficial to Ghana for a number of reasons.

Bipartisan committee

He said the President had directed the Finance Ministry to investigate the structural causes for the depreciation of the cedi and measures to address the situation.

To that end, he said, the ministry and the Governor of the Bank of Ghana would work together to put in place a bipartisan committee to carry out the investigations.

“Mr Speaker, the cedi suffered some turbulence during the first quarter of this year mainly as a result of factors including pressure on the current account as a result of income transfers by corporate bodies, as well as seasonal demands by importers,” he said.

Investors

Mr Ofori-Atta explained that the depreciation of the cedi was not due to weak fundamentals but rather a combination of structural rigidities and the apparent speculative behaviour of portfolio investors and market participants.

He said the cedi had, however, performed better over the last two years than compared specifically to 2012 and 2016.

He said the cedi had made great strides towards recovery on the back of the successful issue of the $3-billion Eurobond and the seventh and eighth IMF reviews which restored confidence in the Ghanaian economy.