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International Monetary Fund. African Dept.
This paper discusses Ghana’s Seventh and Eighth Reviews Under the Extended Credit Facility Arrangement and Request for a Waiver of Nonobservance of Performance Criterion (PC). Ghana’s macroeconomic performance has significantly improved in the last two years under the ECF-supported program. The elevated debt burden and fiscal risks from the financial and energy sectors limit policy space. The large loss of foreign exchange reserves in 2018 is a pointed reminder of Ghana’s exposure to shifting investors’ sentiment and external shocks, amplified by the government’s still elevated financing needs. Ghana’s legacy of political budget cycles will test the authorities’ commitment to macroeconomic discipline and reform in 2020—a challenge that the authorities intend to face head on. Corrective measures have been put in place to address the PCs missed at end-June (three) and end-December (two) and the continuous PC on credit to the government by the Bank of Ghana.
International Monetary Fund. African Dept.
This IMF Staff Report highlights that the robust economic growth in Côte d’Ivoire is projected to continue in 2018. The inflation remains subdued. The program aims to achieve a sustainable balance of payments position, foster inclusive growth and poverty reduction, and create fiscal space for investing in priority infrastructure and social projects. Strong economic performance since 2012, with average annual growth of 9 percent, reflected the economic recovery following political normalization, improved business environment, strong program of reforms, and supportive fiscal policy. A key policy challenge is to sustain robust growth and make it more inclusive and private sector-driven. Robust medium-term growth is expected to be supported by domestic demand.
International Monetary Fund. African Dept.
Program performance improved in 2017 and macroeconomic conditions have strengthened considerably. Growth increased on the back of expanded oil production; inflation declined; the fiscal deficit was significantly reduced, leading to a primary surplus for the first time in fifteen years; the exchange rate regained stability; and the external position improved, with a large reserve build-up. Challenges remain, though, as a still elevated (albeit declining) debt burden and the economy’s exposure to risks limit policy space; and progress in meeting structural benchmarks remains mixed. Program discussions focused on policies to lock in recent gains to secure continued stability and progress beyond the Fund-supported program (in line with the authorities' goal of "irreversibility" of sound policies).
Vito Amendolagine, Mr. Andrea F Presbitero, Roberta Rabellotti, Marco Sanfilippo, and Adnan Seric
The local sourcing of intermediate products is one the main channels for foreign direct investment (FDI) spillovers. This paper investigates whether and how participation and positioning in the global value chains (GVCs) of host countries is associated to local sourcing by foreign investors. Matching two firm-level data sets of 19 Sub-Saharan African countries and Vietnam to country-sector level measures of GVC involvement, we find that more intense GVC participation and upstream specialization are associated to a higher share of inputs sourced locally by foreign investors. These effects are larger in countries with stronger rule of law and better education.
International Monetary Fund. African Dept.
This paper discusses Ghana’s Second Review Under the Extended Credit Facility Arrangement and Request for Waiver for Nonobservance of Performance Criterion (PC). Program implementation has been broadly satisfactory to date, but the economic outlook remains difficult, and risks are tilted to the downside. All PCs were met at end-August 2015, with the exception of the continuous PC on nonaccumulation of external arrears, which was not observed owing to some small payments delays. The IMF staff supports the authorities’ request for a waiver for this, given the corrective actions that will be implemented to avoid new external arrears. The IMF staff recommends completion of the second review.
International Monetary Fund. African Dept.
EXECUTIVE SUMMARY Growth remains robust, despite slight downward revisions. Growth estimates for 2013 and projections for 2014 were revised to 6.6 and 6.8 percent, respectively, reflecting weather and weaker terms of trade. Inflation is around zero, partly due to subsidized food prices. The revised 2013 current account deficit rose to 7 percent of GDP, with a drawdown of imputed reserves. The 2013 fiscal deficit increased to 3.5 percent of GDP, reflecting weaker revenues and spending for subsidies, partly offset by higher grants. In line with 2011 Article IV recommendations, the authorities maintained a prudent fiscal stance, despite numerous shocks, and implemented structural reforms that have improved the resilience of agriculture, especially cotton. Social transfers have been bolstered to ensure the benefits of growth are better distributed. An updated external stability analysis shows that the exchange rate is broadly in line with fundamentals, and an updated joint debt sustainability analysis maintains a “moderate” risk of debt distress. Program performance has been satisfactory. The authorities are requesting a waiver for a non-observance in the performance criterion for net domestic financing at end-December 2013, with most other quantitative targets met and all structural benchmarks for end-January and end-March met. Program targets differ mainly due to higher budget support projections. The 3 percent fiscal deficit target for the medium term macroeconomic framework remains unchanged, although with a higher share of current spending. Policy discussions focused on composition and quality of spending, transfers to public enterprises, and natural resource revenues. The authorities recently submitted a supplemental budget that increases the share of current spending for a higher wage bill and more social and public enterprise transfers, but remains within program targets as a result of spending offsets and higher budget support. The authorities are proposing an audit of large public enterprises to estimate needs for the medium term, and inform reforms to reduce transfer needs. The National Assembly did not approve a new mining taxation code by end-2013 as expected, rather, the draft code was sent back to the authorities for further consideration of investors’ concerns.