Friday, 24 May

Domestic adjustment policies: Addison outlines key points for IMF's consideration in Washington

Dr Ernest Addison - Governor BoG

Bank of Ghana Governor, Dr Ernest Addison has on behalf of his fellow governors called for a stronger support from development partners including the International Monetary Fund (IMF) for each country’s domestic adjustment policies in the face of complex domestic and external challenges.

Addressing this year's African Consultative Group (ACG) meeting with IMF Managing Director Kristalina Georgieva in Washington, USA, Dr. Addison stressed the importance of the IMF's policies remaining adaptable to changing global conditions to better serve vulnerable African countries.

He outlined key points for consideration by Georgieva and the IMF under the theme "Bolstering Africa’s Financing through the Overlapping Crises and Beyond."

Firstly, central banks stress the need for the IMF's policies to remain pragmatic and agile in response to evolving global conditions. Dr. Addison highlighted the necessity for a comprehensive review of Low-Income Countries (LICs) facilities to maintain concessional terms and increase access to financing, particularly in light of the global inflationary pressures.

“We underline the necessity for the upcoming comprehensive review of LICs facilities to maintain the PRGT’s concessionality and promote higher access to reverse erosion amplified by the global inflationary episode,” he stated.

He also emphasized the importance of replenishing resources for the Catastrophe Containment and Relief Trust (CCRT) to provide grant support to vulnerable members facing shocks, such as the recent food crisis triggered by the El Niño phenomenon.

“We also underscore the criticality of replenishing the CCRT resources envelope to offer grant support to our most vulnerable members in this shock-prone world. Considering the expiry of the Food Shock Window amidst a food crisis triggered by the El Nino phenomenon, Fund emergency financing alongside augmentations in program countries would be important to close climate induced financing gaps. In this regard, we call for intensified fundraising efforts under the second phase of the resource mobilization initiatives,” governor Addison added.

Secondly, Dr. Addison called for enhanced collaboration between the IMF and the World Bank to better align their support for LICs. He stressed on the need for coordination between the IMF's LIC Facilities Review and the World Bank's IDA21 replenishment efforts.

Furthermore, Dr. Addison stressed the importance of considering all financing options, including the use of the IMF's internal resources. He suggested the opportune time for modest gold sales, particularly given favorable gold prices amidst multiple shocks and crises.

Lastly, Dr. Addison reiterated the request for further improvements to the G20 Common Framework while leveraging the Global Sovereign Debt Roundtable (GSDR) to facilitate transparent and equitable debt resolution, including debt cancellation for the most vulnerable members.

He welcomed the review of the IMF's internal debt policies but noted the need for impactful changes that achieve their intended purpose.




Source: Mensah