Skip to main content

World Bank Approves US$215million Budget Support for Ghana

The World Bank board has approved a US$215 million Poverty Reduction Support Credit (PRSC) to the Government of Ghana. The goal of the credit is to support the government’s efforts to consolidate ongoing fiscal stabilization and promote the development objectives set in the Ghana Shared Growth and Development Agenda (GSGDA) Ghana’s National Medium Term Development Policy Framework for 2010-2013.

Over the last decade Ghana has received a total of six Poverty Reduction Support Credits from the World Bank, averaging US$100 million per year in budget support between 2003 and 2008, to support implementation of the Ghana Poverty Reduction Strategy (GPRS I and II).

After the fiscal crisis of 2008, an agreement was reached to increase budget support in a countercyclical manner to help Ghana reduce its macro-imbalances in a way that does not hurt growth, the process of job creation, and the poor. Accordingly, a record total support of US$300 million was delivered in 2009, and US$215 million now.

It is expected that this particular support will continue to fall in the future as the macro-imbalances continue to be reduced, and that Banks efforts will shift back towards support for job creation.

‘Our PRSCs have played an important role in supporting the gradual stabilization of the economy the reduction of inflation and the prime rate in ways that preserve growth and job creation, said Sebastien Dessus, World Bank Lead Economist for Ghana. Indeed, growth has continued during 2009 and 2010 and has remained well above 5% per year, which is a remarkable record for an economy undergoing deficit reduction.
The GSGDA has supported government actions to tackle some of the key structural factors behind macro-instability, including long-standing public sector and energy issues, while protecting the poor and preparing for the oil era through effective sector management and regulation.

The specific reforms which government had undertaken to implement, within its medium term development framework, included : establishment of a process for an efficient cash management system for Government of Ghana consolidated funds; establishment of a process of compiling claims and outstanding payments system; preparation of a harmonized chart of accounts for budgeting, accounting and reporting for all its MDAs; and completion of a definitive roll of Subvented Agencies; implementation of recommendations of the electricity financial recovery plan for the Volta River Authority (VRA), the Northern Electricity Department of the VRA, Electricity Company of Ghana and Ghana Grid Company (power utility companies).

The rest are assignment of institutional responsibilities, budget, detail objectives, action plan and timeline for the adoption and use of a common targeting mechanism for the Livelihood Empowerment Against Poverty (LEAP); submission of a Petroleum Revenue Management Bill to the Cabinet based on broad consultations with stakeholders; and submission to Cabinet for decision a revised Extractive Industries Transparency Initiative (EITI) institutional framework to include the oil and gas sectors. The above commitments were all met during the past year.

The current facility also outlines the government commitments, again drawn from its own medium term plan, that would need to be met to allow for the next disbursement of the budget support operation (PRSC8), foreseen to happen in about a year.
These relate to the main challenges facing Ghana’s macroeconomic objectives, and include the improvement of the quality of government spending, job creation constraints, the burden of arrears on job creation, and the poor performance of state-owned enterprises.

The specific commitments include the Government, through the Ministry of Finance & Economic Planning, and the Controller & Accountant Generals Department, reinstates and enforces commitment controls for all MDAs, such that, no new arrears over their budget accrue through uncontrolled spending on Item 3 and 4; the Government, through the Ministry of Finance & Economic Planning, develops and submits to Cabinet for decision the second Financial Sector Strategic Plan, FINSEP II; and the Government, through the Ministry of Finance & Economic Planning, and the Public Sector Reform Secretariat, develops and submits to Cabinet for decision and announcement the action plan on Subvented Agency reform (i.e. decisions on those for closure, withdrawal of subvention, those on reduced subvention and timelines for implementation).

Also include the Government, through the Ministries of Local Government & Rural Development, and Finance & Economic Planning, finalizes the Comprehensive Decentralization Policy following all consultations, and submits the Policy and Implementation Plan to Cabinet for approval; the Public Utilities Regulatory Authority establishes and implements an electricity automatic tariff adjustment mechanism; and the Government, through the Ministries of Energy, and Finance & Economic Planning, submits to Cabinet for decision an action plan regarding the restoration of Tema Oil Refinery financial sustainability.

The rest are the Government, through the Ministry of Employment and Social Welfare pre-tests and validates the Common Targeting mechanism, in collaboration with Ministries of Agriculture, Health, Education, Local Government & Rural Development; and the Government, through the Ministry of Energy, submits to Cabinet for decision a policy proposal establishing a petroleum regulatory authority.

To preserve macro stability while creating jobs, we need to improve the quality of our expenditures, and broaden the tax base in order to collect more revenues. To do so, we need to continue our efforts to reform public financial management, review the import duty exemption regime, improve the management of our State Owned Enterprises, continue to rationalize recurrent expenditures, and remain vigilant in the face of the threat of high debt burden. We also need to finalize our preparations for the oil era, notes Dr. Kwabena Dufuor, Ghanas Minister for Finance and Economic Planning.

In 2011 in particular and over the medium term in general, the Government of Ghana is committed to continuing the fiscal consolidation that it began in 2009 by further reducing the fiscal deficit while at the same time accelerating growth.

Beyond providing financial and technical support, the World Bank is keen on enhancing citizen engagement and participation in the discussions leading to important policy decisions, stresses Ishac Diwan, Country Director for Ghana.

Comments

Popular posts from this blog

MTN Ghana & MTN MoMo CEOs win laurels at Ghana CEO Awards

  The Chief Executive Officer of MTN Ghana, Selorm Adadevoh ,   has been adjudged  CEO of the Year  –  Telecom  at the  2 nd  edition of the  Ghana CEO  Vision  and  Awards   held  in Accra. At the same event, the CEO of Mobile Money Limited (MTN MoMo), Shaibu Haruna was also adjudged CEO of the Year – FinTech Service Provider. Selorm  Adadevoh’s award  is in recognition  of  his   achievements   in the areas of   sustainability, leadership excellence, innovation and others  in the telecoms space  which  has contributed to  job creation to support the  growth of Ghana’s economy. Patrick Afari (r), General Manager, Supply Chain Management and General Services receiving CEO of the Year – Telecom Award on behalf of Selorm Adadevoh Receiving the award on behalf of Selorm, Patrick Afari, General Manager, Supply Chain Management and General Services ,  expressed appreciation to the organizers for the award. He  noted that  th e  award will go a long way to inspire MTN to do more for Ghanaian

EB-ACCION DISBURSES US$15 MILLION

By Fred SARPONG Ecobank-Accion (EB-Accion), a partnership between Ecobank Ghana Limited and Accion International has disbursed amount to the tune of $15 million to over 36,000 borrowers in Micro, Small and Medium Enterprises (MSMEs) sector in the country, since the institution was set up barely six months ago. Frances Adu-Mantey, the Managing Director of EB-Accion disclosed this to Business Week in Accra last week during the official opening of Accion Hub headquarters in Africa. The institution’s current portfolio stands at GH¢4 million. She stated that currently, EB-Accion have over 6100 customers who save with them throughout the four branches of the institution. According to her, in order to improve the services of the institution, Ecobank Share Services center will facilitate the technology aspect of the bank by networking all the branches of EB-Accion. Maria Otero, President and Chief Executive Officer of Accion International said that the center’s staff in Accra will provide supp

Amantin & Kasei Community Bank posts impressive growth, with over GH¢1m profit

 Amantin and Kasei Community Bank, at Amantin in the Bono East Region has posted impressive growth in all the performance indicators during 2022 financial year under review. The bank recorded profit after tax of GH¢1,055,662, representing 35.66% more over the 2021 figure of GH¢778.151. This achievement stemmed out of 49.24% gross income growth from GH¢8,143,526 to GH¢12,153,537. Total deposits of the bank went up by 36.20%, changing from GH¢50,959,848 in 2021 to GH¢69,405,591 in 2022. The bank increased loans and advances by 22.15% from GH¢14,128,017 to GH¢17,257,614. Total assets showed an appreciation of 29.32%, amounting to GH¢77,918,288 as against GH¢60,250,693 in the previous year. On the other hand, the bank posted a marginal increase in short term investments portfolio from GH¢24,439,761 to GH¢26,585,698, indicating 8.78% change. The Chairman of Board of Directors, Amantin and Kasei Community Bank, Dr. John Oduro-Boateng, disclosed this during the 18th annual general meeting of