The International Monetary Fund (IMF) has watered down arguments that conditionalities under its Extended Credit Facility (ECF) agreement with Ghana would be renegotiated should there be a change of government.

Asked by the B&FT whether it is possible, as the opposition NPP has hinted, for some of the terms to be renegotiated, Resident Representative of the Fund, Natalia Koliadina, said it would come at a “cost.”

Her outfit, she said, does not expect any such thing to happen considering the success of the programme.

“It comes at a cost to economic growth if the programme is discontinued. So, who will be interested in undoing what has already been achieved? So, I believe that the government, whoever it is, will continue building on the achievement that has been made in the past two years,” she said.

Some of the IMF conditionalities have come under severe criticism from financial analysts, including the one that instructs zero financing of government by the Bank of Ghana.

Executive Director of the Institute of Fiscal Studies (IFS), Professor Newman Kusi, has called the move premature and asked for to be removed.

“When we say it’s premature, we mean that the drastic cut is not in the interest of the country. Because whether BoG finances government or not, if the government intends running a deficit, it will do it via the issuance of treasury bills to pay for the deficit. When government does that, interest on the T-bills goes up, undermining the inflation targeting mechanism.

You cannot say that the central bank should not support government. It doesn’t make sense. You can’t compare Ghana to UK, or US where their central banks do not finance deficit; those are strong and tried and tested institutions. How can you say that central bank should not finance government? We oppose that,” Prof. Kusi said.

Head of the Economics Department of the University of Ghana, Professor Peter Quartey, also suspects that particular conditionality is the reason government has been so keen on the Eurobond.

“There is a big revenue gap that government needs to fill. Since the IMF programme does not allow the Bank of Ghana to finance government any longer, it has become necessary that government must find alternatives to raise revenue,” he said,

“So, I think this influenced the decision of government to attempt issuing a fifth Eurobond so it can raise money to close the revenue gap,” he said.