Ghana to consolidate economic gains with $100m World Bank budget aid
The Board of Executive Directors of the World Bank on Thursday approved the eighth poverty reduction support grant (PRSG8) of US$100 million for Ghana.
This facility was processed within the harmonized Multi Donor Budget Support (MDBS) framework.
It supports the implementation of the Ghana Shared Growth and Development Agenda (GSGDA 2010-2013), which succeeded the second Growth and Poverty Reduction Strategy (GPRS2). The GSGDA emphasizes the need for macroeconomic stabilization, greater public sector efficiency and executive transparency and accountability to provide the adequate setting for the reduction of poverty and socio-economic inequalities through agricultural, private sector, infrastructure and human resource development.
Specifically, the PRSG8 supports continuing and deepening efforts initiated since 2009 to restore budgetary discipline and financial stability and (ii) foster public sector reform and strengthen sustainability in the energy sector, while (iii) protecting the poor and (iv) developing the oil and gas institutional framework. Government’s efforts supported by the PRSG8 concentrate on measures to:
Prevent the accumulation of new public expenditure arrears and adopt a second financial sector development strategy
Adopt an action plan for the continued overhaul, divestiture or commercialization of State Owned Enterprises
Implement the decentralization policy particularly the composite budgeting framework of the district assemblies
Establish and implement an electricity automatic tariff adjustment mechanism, and adopt an action plan for the restoration of the Tema Oil Refinery financial sustainability
Test and validate the common targeting mechanism for major social protection program
Establish a petroleum regulatory authority.
According to Dr. Kwabena Dufour, Ghana’s Minister of Finance and Economic Planning, “The Government has taken appropriate measures to enhance fiscal discipline and stabilize the economy in pursuit of the country development agenda. We believe that with continued support from the World Bank and other development partners, Ghana will be able to achieve the objectives set out in the Ghana Shared Growth and Development Agenda.
“The Government has a tall order of reducing maternal mortality, eliminating extreme poverty, ensuring sustainable poverty reduction, as well as creating the conditions necessary for prosperity in our country. The PRSG8 support will greatly facilitate the achievement of these goals. ”
Among the expected outcomes after the implementation of the PRSG8 are: a reduction in the stock of public arrears and non-performing loans in the banking sector; the implementation of a number of performance contracts for Subvented Agencies, an increase in the number of districts with effective composite budgeting, the reduction of operational subsidies to power utilities, the reduction of operational losses at the Tema Oil Refinery (TOR), the identification of newly enrolled regular beneficiaries of the Livelihood Empowerment Against Poverty (LEAP) using the common targeting mechanism, the regular update of the Ghana Extractive Industries Transparency Initiative (GHEITI) reconciliation reports on oil and gas and other mining activities, and the submission of timely quarterly reports on petroleum receipts.
Sebastien Dessus, Lead Economist for the World Bank in Ghana noted that “The PRSG8 concluded a series of budget support operations (EGPRC, PRSC7) started in 2009 to support Ghana’s macroeconomic stabilization efforts and the development of the oil and gas legal and regulatory framework. Having regained fiscal space and become a middle income country, Ghana’s challenge is now to take full advantage of its current oil-driven economic boom to decisively propel its economy to a higher development and poverty reduction trajectory, through wise and transformative investments, accelerated policy reform implementation, and the strengthening of accountability mechanisms.
“The operation seeks to provide objective information and foster a dialogue among a range of civil society organizations, academics, direct stakeholders, development partners and the Government in these domains. ”