The World Bank Group’s Board of Executive Directors today approved US$150 million budget support for Ghana.
The credit from the International Development Association (IDA) supports the First Macroeconomic Stability for Competitiveness and Growth Development Policy Financing (DPF), the first of three development policy financing operations aimed at helping the Government of Ghana stabilize its economy and shore up fiscal control by implementing financial policies and processes that are transparent and predictable.
The Board also approved IDA’s very first landmark Policy-Based Guarantee (PBG) of up to US$400 million for Ghana, which may be used to support Ghana’s future external debt financings.
“The proposed credit is the first in a programmatic series that will make policy more predictable and enhance the productivity of public spending.” says Santiago Herrera, World Bank Task Team Leader for this Project.
“As Ghana transitions from concessional financing towards market-based financing, the cost of public funds will increase, and so would the productivity of public capital to ensure that future obligations can be met. It is our hope that that PBG will minimize costs and risks.”
Following a period of high and sustained growth, the Ghanaian economy experienced considerable turbulence reflected in high twin deficits and low growth.
Twin deficits exceeded 10% of GDP, and GDP growth collapsed to 4% last year after reaching 14% in 2012. Ghana was hit by a series of external and domestic shocks which have shaken its economy fundamentals very hard.
The credit from the International Development Association (IDA) supports the First Macroeconomic Stability for Competitiveness and Growth Development Policy Financing (DPF), the first of three development policy financing operations aimed at helping the Government of Ghana stabilize its economy and shore up fiscal control by implementing financial policies and processes that are transparent and predictable.
The Board also approved IDA’s very first landmark Policy-Based Guarantee (PBG) of up to US$400 million for Ghana, which may be used to support Ghana’s future external debt financings.
“The proposed credit is the first in a programmatic series that will make policy more predictable and enhance the productivity of public spending.” says Santiago Herrera, World Bank Task Team Leader for this Project.
“As Ghana transitions from concessional financing towards market-based financing, the cost of public funds will increase, and so would the productivity of public capital to ensure that future obligations can be met. It is our hope that that PBG will minimize costs and risks.”
Following a period of high and sustained growth, the Ghanaian economy experienced considerable turbulence reflected in high twin deficits and low growth.
Twin deficits exceeded 10% of GDP, and GDP growth collapsed to 4% last year after reaching 14% in 2012. Ghana was hit by a series of external and domestic shocks which have shaken its economy fundamentals very hard.
Credit: World Bank
