Ghana’s rate of disbursing funds from the World Bank has been described as below average, and could be improved. The rate of disbursement is currently 15 percent instead of between 20 and 25 percent, which would have been more ideal.

This was disclosed at a media interaction in Accra by the Country Director of the World Bank office in Ghana, who said about US$750 million is available for disbursement.

“Our portfolio isn’t a super-performing one. In fact, it can be described as below average,’’ he said, attributing the issue to certain administrative procedures and the need to comply with requirements of the Procurement Act.
Mr. Diwan commended government for its recent decision to re-allocate funds from projects whose implementation process is slow to projects which are moving very fast. The Bank has engaged some non-governmental agencies to assess its projects and programmes to assess their effectiveness.

He described the decision as a very bold one which will impact positively on the economy, and also enable government to improve upon its disbursement of the Bank’s funds.

The economy is benefitting from the second tranche of US$143 million from the Economic Governance and Poverty Reduction Credit, a facility which aims to support government’s efforts in the midst of the global crisis to bring its fiscal stance to a sound and sustainable track, and protect the development set in Ghana’s Second Growth and Poverty Strategy (GPRS II) for the period 2006 and 2009.

The GPRS II emphasises the centrality of private-led growth to reduce poverty, alongside human development and governance efforts to promote equity. A first tranche of U$150 million had been disbursed a year earlier in July 2009, after the Board approved the two-tranche facility aimed at supporting Ghana’s efforts in the midst of the global financial crisis to restore budgetary discipline and tackle long-standing public sector and energy issues, while protecting the poor.

The second tranche, which should have been disbursed in November last year, delayed because government was expected to meet six specific conditions. However, government has now met all but one. On the performance of the economy, he said: “We are optimistic of the economic prospects. The economy is improving.”

Economic growth in 2009 was modest but remained strong in spite of fiscal tightening aimed at reducing the budget deficit gradually to the desired 3-4% of GDP by 2014. A target of 6.5% growth in real GDP has been set in the 2010 budget with continued focus on social spending in areas such as education, health, employment and social welfare.

Other indicators such as inflation and the central bank’s gross international reserves position look better than before, with inflation currently at 10.6% nearing a targetted single-digit level. The Bank also acknowledges that the government’s fiscal plan for 2010 is consistent with the long-term outlook for fiscal deficit and public debt ratios in the ongoing fiscal consolidation framework.
Importantly, the financing plan for the 2010 budget relies less on bank financing than in 2008-09 – so a larger share of credit will be available to support private sector investment. This is crucial to sustaining the growth momentum, but will need to be complemented by the appropriate monetary actions if jobs are not to be sacrificed.

Risks to the ongoing multi-donor programme exist, especially in the area of fiscal management. The public sector wage bill, which remains high relative to the size of the economy, could come under increased stress unless the new “single spine” pay structure is well-managed.

Broad structural and systemic reforms in the public services will also be key to lubricating the gridlock that hampers fund disbursements and meeting important fiscal and monetary targets.

Source: B&FT