Ghana: World Bank Offers Budget Support For Ghana
World Bank Offers Budget Support For Ghana
The World Bank (WB) Board has approved a $215 million Poverty Reduction Support Credit (PRSC) to Ghana to help consolidate macro-economic stability, public financial management, public sector reform, energy and social protection.
According to a WB statement copied to Ghana News Agency in Accra, the goal of the credit is to support government’s efforts to consolidate on-going fiscal stabilisation and promote the development objectives set in the Ghana Shared Growth and Development Agenda (GSGDA), Ghana’s National Medium Term Development Policy Framework.
The statement said over the last decade Ghana has received six Poverty Reduction Support Credits from the World Bank, averaging $100 million per year in budget support between 2003 and 2008, to support implementation of the Ghana Poverty Reduction Strategy (GPRS I and II).
It noted: “After the fiscal crisis of 2008, an agreement was reached to increase budget support in a counter-cyclical manner to help Ghana reduce her macro-imbalances in a way that does not hurt growth, the process of job creation, and the poor.
“Accordingly, a record total support of $300 million was delivered in 2009, and $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 the bank’s efforts will shift back towards support for job creation”.
According to the WB, growth continued during 2009 and 2010, and remained well above five per cent per year, which was a remarkable record for an economy undergoing deficit reduction.
The statement explained that GSGDA 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 has undertaken to implement, within its medium term development framework, include: establishment of a process for an efficient cash management system for Government of Ghana Consolidated Funds.
Others are establishment of a process of compiling claims and outstanding payments system; preparation of a harmonised chart of accounts for budgeting, accounting and reporting for all its MDAs and completion of a definitive role of subvented agencies.
The rest are: implementation of recommendations of the electricity financial recovery plan for the Volta River Authority (VRA), Northern Electricity Department of the VRA, Electricity Company of Ghana and Ghana Grid Company (power utility companies).
The WB also noted that the 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) form part of the strategy.
It said the current facility outlines the government’s commitments drawn from its own medium term plan that will need to be achieved to allow for the next disbursement of the budget support operation (PRSC8).
These relate to the main challenges facing Ghana’s macroeconomic objectives, and include 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.
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