The International Monetary Fund (IMF) in Ghana has a new Resident Representative. Dr. Leandro Medina (LM) took office in Ghana in September last year and was immediately busy with staff-level negotiations with the country for a program that would allow the fund to provide assistance for microeconomic stability and debt sustainability. He opened up to answer a few questions from Theophilus Yartey (TY), Deputy Editor of the Daily Graphic, on many issues.
THEOPHILUS Yartey (TY): You just started your new role as IMF Resident Representative in Ghana. Is Ghana your first stop in Africa? What is your impression of the country?
Leandro Medina (LM): I took on the role of IMF Resident Representative to Ghana in September. I have been well received by Ghanaians and I hope to contribute to the progress Ghana is making in transforming the economy.
I have worked in African countries for many years, working with African governments on how to balance spending with profits to provide social services to their people, especially the most vulnerable.
Africa is a diverse and fascinating region with a young and innovative population that can offer a great future – this is what I want.
In fact, Mozambique was the first country I worked in Africa and this was in 2014. I also had some experience working in Ghana. Starting in 2017, I had the opportunity to work in Ghana for three years.
In this regard, I have also been able to visit Accra on several occasions as part of the IMF’s engagement with the Ghanaian authorities and the wider public. Now I’m back in this beautiful country, and I have to say that everyone makes me feel at ease.
In addition to the country-related work, I am also involved in research, especially in the informal economy, which is relevant to the region, and especially to Ghana, due to the size of the informal sector.
TY: Aside from your responsibilities as a Fund Representative, what are some of your social interests?
LM : I hope to learn more about Ghanaian history, culture and music. I love music – especially the fusion between Latin music and jazz – and have heard a lot about different artists and musical rhythms and the great influence of African rhythms on Latin American music. I’m looking forward to adding some Afrobeats and highlife to my playlist.
I also like to watch football. In between work, I managed to watch some World Cup matches. The passion and energy I saw, especially when the Black Stars played, explains what they are
say Ghana is a football country.
TY : Ghana and the IMF have reached staff-level agreement on a new program aimed at restoring macroeconomic stability and promoting inclusive growth. What does that mean to you
has staff level agreement been reached? How many more steps do we need to take? Is there a clear timeline?
LM : Ghana is facing unprecedented challenges. The global environment, which has been affected by the terrible pandemic, and now the war in Ukraine and tighter global financing conditions together with inflation, make the situation more difficult for countries around the world, including Ghana.
Reaching a staff-level agreement means that an understanding of policy and reforms between IMF staff and the Ghanaian authorities has been achieved. This is an important milestone in a
a process that will end with IMF funding, after the IMF Executive Board approves the program request.
So, there are steps. An important step before the council’s approval is that the IMF receives guarantees from partners and creditors, meaning commitments, so that the program is fully financed and the debt is brought to a sustainable path.
TY: Based on the success of the negotiations, how much can Ghana access from the Fund? All things being equal, how long will it take for Ghana to achieve macroeconomic stability?
LM : The financing from the IMF is about $3 billion, which will be disbursed in tranches over three years. But hope will also open up financial support from other partners.
The implementation of IMF-supported programs is designed to restore macroeconomic stability and debt sustainability, while laying the foundations for stronger and more inclusive growth. Most of the major reforms are expected to be implemented in the early stages of the planned program.
TY : After the debt sustainability analysis and further economic diagnosis, what are some policy recommendations available to the Ghanaian authorities?
LM : Overall, the planned program is aimed at addressing Ghana’s challenges by ensuring the sustainability of public finances while protecting the vulnerable.
For example, on the fiscal front, the strategy relies on early steps to increase revenue and accelerate spending.
In addition, the authorities have committed to strengthening the social safety net, including strengthening targeted cash transfers
programs to protect vulnerable people and improve the coverage and efficiency of social spending. So it’s a balancing act.
The fiscal strategy will also be supported by reforms, such as developing a medium-term plan to generate additional revenue and advanced reforms to improve tax compliance, which will help create space for growth-enhancing measures and social spending by the government.
Efforts will also be made to improve the control of public expenditure commitments, improve fiscal transparency, strengthen the management of public companies and deal with them
structural challenges in the energy and cocoa sectors. The authorities are also committed to improving governance and accountability.
On the monetary and exchange front, reducing inflation, improving resilience to external shocks and improving market confidence are important program priorities. It has been agreed that the Bank of Ghana will continue to strengthen the monetary policy framework and improve exchange rate flexibility to rebuild external buffers.
As part of the authorities’ debt strategy, a domestic debt exchange has been launched. The authorities are committed to taking the necessary mitigation measures to maintain the stability of the financial sector.
We will be able to share more details publicly once the program has been approved by our board, followed by the publication of related documents.
TY: One of the biggest challenges facing Ghana over the years is fiscal consolidation. How can the Fund help fiscal authorities achieve the consolidation they need? And how can we ensure that the poorest are protected?
How can Ghana continue to grow and invest when it needs to be fiscally careful?
LM : It is important that Ghana pursues policies and reforms to restore macro stability and debt sustainability. Fiscal strategy, through domestic revenue mobilization and expenditure rationalization, is a key pillar in achieving these goals. But most importantly, any effort to ensure the sustainability of public finances must be done while protecting the vulnerable.
We pay special attention to and support efforts to strengthen the social safety net, including key programs to protect vulnerable people and increase the coverage and efficiency of social spending.
It’s an important balancing act. We hope – there is no reason not to – and I look forward to working with Ghana to pursue policies to achieve sustainable and inclusive growth.
Source: graphic.com.gh
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