Ghana’s mountain of debt questioned by IMF experts
However Finance Minister Seth Terkper was confident that the IMF loan would go ahead, in an interview with The Africa Report in Accra on 30 August, and that the Washington-based institution’s concerns were mainly about policy actions that needed to be taken in the next stage of the process. Terkper insisted the government had controlled spending rigidly ahead of the election as required by the Fund.
A financial sector source in Accra said there could be slippage in the timetable unless the latest problems are resolved and that could damage market perceptions about Ghana. He added that it was “unthinkable” for the IMF board to stop the programme less than a hundred days before national elections on 7 December. “The IMF experts make their technical assessment and the IMF board will make a political decision,” the source added.
IMF directors in Washington were due to study the conclusions of last week’s special mission to Accra and vote on the release of another $100m to the government at a board meeting in mid-September. Similarly the World Bank and the African Development Bank, which are due to release loans worth $150m and $50m respectively will take their cues from the vote by the IMF board.
The IMF verdict on Ghana’s finances will also affect the government’s ability to float another eurobond — of between $500m to $1bn — on the international capital markets. The finance ministry has already prepared a detailed document, a copy of which The Africa Report has seen, setting out Ghana’s case to investors.
The IMF mission led by Joël Toujas-Bernaté was in Accra from 29 August to 2 September to meet with Terkper, President John Dramani Mahama and Bank of Ghana Governor Dr Abdul-Nashiri Issahaku. Its departure statement on 2 September said: “Outstanding questions remain with regards to certain elements of the legislations recently passed by Parliament and discussions will continue.”
The IMF did not get the legal provision it had requested which would have barred the government from borrowing from the central bank. The IMF experts also had concerns, we hear, about the management of the debt of state-owned energy companies such as the Volta River Authority, the Tema Oil Refinery and the Electricity Company of Ghana which could total over $400m.
Other state owned companies, outside the power sector are estimated to owe another $400m.