Latest News April 14, 2017

news From All Africa

  • UK Government calls for the release of all abducted by Boko Haram

    On the third anniversary of the abduction of the Chibok school girls, Foreign Office Minister Tobias Ellwood and International Development Minister James Wharton said:

    • Our thoughts are with the Chibok girls who remain missing, their families and all those abducted by Boko Haram. We are working side by side with Nigeria in the fight against Boko Haram and call for the release of all those who have been taken.
    • During our visits to Nigeria last year, we heard how people’s lives have been devastated by Boko Haram. We are committed to supporting Nigeria in the fight against these barbaric terrorists. More than 22,500 Nigeria military personnel have received UK training, with a significant number deployed on counter insurgency operations in north-east Nigeria.
    • Lasting stability and security requires all parties to work together to address the long-term causes of the conflict, and the empowerment of women and girls must be at the heart of this process. The UK was one of the first to respond to the humanitarian crisis in north-east Nigeria, and continues to reach millions of people who have been forced from their homes with lifesaving support to improve education, nutrition and basic health services to stop people dying from starvation and hunger.
    • We will not be deterred from supporting Nigeria to tackle violent extremism and build peace for the people of north-east Nigeria.


    • Since 2014 the UK has significantly increased its support to help Nigeria in the fight against Boko Haram through the provision of a substantial package of military, intelligence and development support.
    • The UK has contributed £5 million to the Multi National Joint Task Force, a regional force against Boko Haram, comprised of troops from Nigeria, Niger, Cameroon, Chad and Benin.
    • Last year, we provided £74 million for emergency food, shelter and health care for hundreds of thousands of people displaced by Boko Haram’s violent insurgency. DFID significantly increased its humanitarian support: from £1m in 2014 to £74m last year.
    • In health, DFID is supporting the International Committee of the Red Cross, who have helped restore basic health care services for over 500,000 people affected by conflict, provided 150,000 immunisations for children and enabled over 20,000 women to give birth safely. In 2016 alone we reached over a million people with food and provided 34,000 children suffering from malnutrition with lifesaving treatment.
    • In education, DFID is supporting access to education for over 25,000 marginalised children in the north-east, including girls, through an innovative approach that engages government, community members and religious leaders to introduce the teaching of literacy in the local language, numeracy and basic science alongside Quranic education in 200 “Integrated Quranic schools” (IQS). DFID supported research suggesting strong demand from communities affected by the conflict with Boko Haram to expand this approach.

    Distributed by APO on behalf of United Kingdom Foreign and Commonwealth Office.

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  • Treasury Sanctions Libya-Based ISIS Financial Facilitators and Algerian ISIS Supporter and Arms Trafficker

    The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today designated Libya-based Islamic State of Iraq and Syria (ISIS) financial facilitators Ali Ahmidah al-Safrani and Abd al Hadi Zarqun, as well as Algerian ISIS supporter Hamma Hamani.  Al-Safrani and Zarqun were designated pursuant to Executive Order (E.O.) 13224, which targets terrorists and those providing support to terrorists or acts of terrorism.  Hamani was designated pursuant to E.O. 13224 and E.O. 13726, which targets those engaging in actions or policies that threaten the peace, security, or stability of Libya including through the supply of arms or related materiel.  Al-Safrani and Zarqun are Libyan nationals and have played important roles in ISIS’s financial operations in Libya.  Hamani is an Algerian national who provided support to ISIS.  As a result of today’s action, all property and interests in property of al-Safrani, Zarqun, and Hamani subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.

    “These designations isolate al-Safrani, Zarqun, and Hamani from the global financial system and expose their activities to the world,” said OFAC Director John E. Smith.  “Today’s action not only targets ISIS’s activities in North Africa but it also demonstrates Treasury’s commitment to pursue terrorists wherever they are.” 

    Ali Ahmidah al-Safrani
    OFAC designated Ali Ahmidah al-Safrani for acting for or on behalf of ISIS.  Al-Safrani pledged allegiance to ISIS prior to 2015 and is responsible for handling financial activities for the group in Libya.  Al-Safrani also assisted the overall ISIS leader and commander in Sirte, Libya.  For the past two years, al-Safrani has been one of the most prominent leaders within ISIS in Libya.

    Abd al Hadi Zarqun
    OFAC designated Abd al Hadi Zarqun for acting for or on behalf of ISIS.  Zarqun is a Libya-based ISIS financier who was one of the most prominent ISIS leaders in Sirte, Libya.  He helped establish the initial ISIS presence in Sirte and was one of the first Libyan extremists to pledge allegiance to ISIS leader Abu Bakr al-Baghdadi.  As of mid-2016, Zarqun remained a high-level ISIS leader in Libya.

    Hamma Hamani
    OFAC designated Hamma Hamani for acting for or on behalf of ISIS and for engaging in actions or policies that threaten the peace, security, or stability of Libya including through the supply of arms or related materiel.  In 2016, Hamani provided support to ISIS and for several years he has been involved in weapons trafficking in Libya.

    Distributed by APO on behalf of U.S. Department of the Treasury.

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  • Treasury Sanctions Two Central African Republic Militia Commanders

    Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Abdoulaye Hissene (Hissene) and Maxime Mokom (Mokom) pursuant to Executive Order (E.O.) 13667 for engaging in actions that threaten the peace, security, or stability of the Central African Republic (CAR).  As a result of today’s action, all property and interests in property of these individuals within U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. 

    “The individuals designated today are responsible for prolonging instability in the Central African Republic,” said OFAC Director John E. Smith.  “Today’s action underscores our ongoing efforts to target those responsible for fueling violence and human rights abuses in the Central African Republic.”
    Abdoulaye Hissene and Maxime Mokom
    In September 2015, Hissene and Mokom collaborated as part of a larger alliance between ex-Séléka members and anti-Balaka allies of former CAR President Francois Bozize, who was sanctioned in May of 2014, to encourage violence in Bangui.  Their collaboration was part of a failed coup attempt designed to overthrow the CAR Government while then-Transitional President Catherine Samba-Panza was attending the 2015 UN General Assembly.  Hissene and Mokom were specifically identified as suspects in the failed coup by the CAR Public Prosecutor’s office.
    In addition, Hissene conspired with Mokom to disrupt a constitutional referendum held in December 2015.  Mokom’s anti-Balaka forces worked with elements of Hissene’s Popular Front for the Rebirth of the CAR (FPRC) ex-Séléka group to intimidate voters and disrupt polling in the town of Kaga Bandoro during the December 13 vote.  Hissene also encouraged retaliatory attacks between different groups.  Hissene is specifically accused of orchestrating violence in Bangui’s KM5 district that killed five, wounded 20, and prevented residents from voting in the referendum.
    In June 2016, Hissene’s KM5 fighters and Mokom’s anti-Balaka supporters may have planned to disrupt the arrival of CAR President Faustin-Archange Touadéra’s flight to Bangui airport, leading the CAR Government to warn publicly of a possible coup attempt.
    On August 12, 2016, Hissene and a group of armed men traveling north from Bangui engaged CAR security forces in multiple gunfights.  The UN’s peacekeeping mission in the CAR, the UN’s Multidimensional Integrated Stabilization Mission in the Central African Republic (MINUSCA), eventually captured some of the men, but Hissene and several others escaped.

    Distributed by APO on behalf of U.S. Department of the Treasury.

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  • Reaffirmation of the Lake Tanganyika Boundary

    The African Union Commission (AUC) convened a Joint Technical meeting of the Lake Tanganyika riparian Member states; namely the Republic of Burundi, the Democratic Republic of Congo, the United Republic of Tanzania and the Republic of Zambia from 10-12 April 2017. The objective of the meeting was to agree on the methodology that would culminate in the reaffirmation of the international boundaries in Lake Tanganyika. The invitation was also extended to the Republic of Malawi and the Republic of Mozambique to share their experiences in the delimitation of their boundary in Lake Malawi/Lake Nyassa.

    Participants requested the African Union Commission through the AU Border Program (AUBP) to support capacity building efforts, agreed on an implementation roadmap and committed to finalize delimitation and reaffirmation process of the Lake Tanganyika within eighteen (18) months. The delimitation and demarcation of land and maritime boundaries is in line with the decision by the 28th ordinary session of the Assembly of the Union for the extension of the deadline for the completion of the delimitation and demarcation of African boundaries by 2022.

    The AUBP vision is that of “a united, integrated Africa, with peaceful, open and prosperous borders”. Consequently, AUBP’s three main areas of activity include: assistance to AU Member States in the delimitation, demarcation and reaffirmation of all African borders by 2022, the promotion of cross-border cooperation, and the development of the technical capacities of personnel in charge of delimitation, demarcation and cross-border cooperation exercises. The Program contributes to the structural prevention of conflict through the delimitation and demarcation of borders and also offers a platform for the negotiated resolution of border disputes and the promotion of regional and continental integration through cross border cooperation.

    Distributed by APO on behalf of African Union Peace and Security Department.

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  • Libya: The Week Ahead at the United Nations – 14-21 April 2017

    (This document is for planning purposes only and is subject to change)

    Available online: 

    Wednesday, 19 April 

    In the morning, the Security Council will receive a briefing on the UN Support Mission in Libya (UNSMIL) and Libya sanctions. 

    Distributed by APO on behalf of United Nations – Office of the Spokesperson for the Secretary-General.

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  • Briefing to the General Assembly on the Secretary-General's Call to Action on famine response and prevention – 13 April 2017

    Situational briefing to the General Assembly on the Secretary-General’s Call to Action on famine response and prevention 

    New York, 13 April 2017 

    As delivered by Ms Reena Ghelani, Deputy Director, OCHA Coordination and Response Division 

    His Excellency, Mr Peter Thomson, President of the General Assembly and

    Mr Anthony Lake, Executive Director of UNICEF


    Ladies and Gentlemen,

    I am delivering this statement on behalf of the Under-Secretary-General for Humanitarian Affairs and Emergency Relief Coordinator, Mr. Stephen O’Brien.

    Thank you for this opportunity to brief on the grave situation facing millions of people in South Sudan, Somalia, Yemen and north-east Nigeria. The numbers are staggering. As his Excellency outlined, more than 20 million people face famine or the risk of famine across the four countries. Some 1.4 million children are severely malnourished. Over 21 million people lack sufficient access to health care, at a time when three out of the four countries are experiencing cholera outbreaks. And more than 20 million people lack clean water and sanitation. Around eighty per cent of affected populations live in rural areas and a combination of hunger and conflict is forcing people to be displaced, both internally and as refugees.  Those who were forced from their homes in past years by conflict are being hit particularly hard as a consequence of this current crisis.

    The crises in these four countries are protracted and complex – and the impacts will be felt for years.

    In South Sudan, years of appalling violence and conflict have left over 5 million people in need of urgent food assistance, an estimated 100,000 of whom are, already, facing famine. More than 1 million more are on the brink of famine. Over a quarter of a million children are suffering severe acute malnutrition. Three years of conflict has displaced some 3.5 million people, disrupted agricultural production of farmers, and crippled the economy. Half of the country’s water points have been damaged or destroyed, and at least 5,000 people have contracted cholera in an outbreak that began in June of last year.

    In Somalia close to 3 million people cannot meet their daily food needs. Some over 500,000 people have fled their homes this year alone in search of food, water, and safety. Acute Watery Diarrhea and Cholera has spread to 11 of 18 regions of the country, with over 18,000 cases reported just this year. Women are particularly impacted, sometimes forced to walk many kilometres to fetch water. In Somalia women will walk 25 to 50 kilometres on average to fetch water, exposing them to violence and sexual abuse.

    Yemen is facing the largest food security crisis in the world with almost 7 million people requiring immediate life-saving assistance and at least 462,000 children suffering severe acute malnutrition. Conflict has damaged and obstructed water networks and only 45 per cent of the country’s health facilities are functioning.

    And in north-east Nigeria, violence has left millions displaced and some 4.7 million people in severe food insecurity – at least 450,000 of them are children suffering from severe acute malnutrition.

    This is the impact of hunger and famine: communities broken, families torn apart, and preventable deaths of men women and children from disease. Famine is about much more than food insecurity. It is about compounding vulnerabilities that leave millions of people without basic human dignity, without hope for the future. It leaves children stunted and out of school. Development gains are stalled or reversed. People abandon their homes, and are robbed of their livelihoods, exacerbating instability across entire regions.

    Seven weeks ago, the Secretary-General called on the international community to take urgent action to prevent this looming catastrophe. He urged all actors to work together to save lives, reduce underlying vulnerabilities, and build long-term resilience to future shocks.

    Humanitarian partners acted early. Humanitarian response plans and action for the year, in each of the four countries, had already incorporated the massive food and other key responses that would be required for the situation we face today. Large-scale operations are underway, in extremely challenging and dangerous environments.

    Since February, UN agencies and their partners have reached over 1.2 million people in South Sudan, more than 330,000 people of them in the famine-affected or at-risk counties of Unity State. In Yemen, humanitarian partners have reached 5.8 million people with food and other assistance so far this year.

    In Somalia, partners and the UN doubled our response from February to March, to reach 1.8 million suffering people with food aid and nearly 500,000 with livelihood support. Around 1.8 million people are targeted for assistance this month in Nigeria alone, where so far this year a quarter of a million people have been reached with emergency water and sanitation assistance, 3.8 million children vaccinated against measles, and over 900,000 people provided basic health services.

    The humanitarian assistance being delivered on the ground is saving lives and livelihoods.  But it is not enough.

    While all four countries have unique contexts, they share a common component. That is of protracted conflict. Likewise, all four countries are marked by severe access constraints due to insecurity and some have costly bureaucratic impediments that impede the reach of life saving aid, and exacerbate the suffering of civilians.

    In Somalia almost one third of the people who need help the most are living in areas under control of Al Shabaab where access is extremely limited. There are indications now that Al Shabaab is using this crisis as part of a “hearts and minds” campaign, to use the situation to feed people. South Sudan remains one of the most dangerous places in the world to be an aid worker – more than 12 humanitarian personnel have been killed this year alone. Here, conflict severely challenges humanitarian presence, forcing lengthy relocations of aid workers, including from famine-affected counties, and affecting directly millions of vulnerable South Sudanese people in need of humanitarian assistance.

    In north-eastern Nigeria, where Boko Haram continues to launch attacks on military and civilian targets, an estimated 700,000 people remain beyond reach for humanitarian actors, living in what are feared to be desperate conditions. And in Yemen, where conflict and insecurity and strain on the economy are driving the crisis, restrictions on the movement of goods into non-Government-controlled ports are at times delayed.

    Humanitarian operations in these four countries require more than US$5.6 billion this year as his Excellency has announced and we need this funding now. In order to be ahead of the game we need this funding now – especially for the priority sectors to respond and prevent famine in the four critical sectors of Food Security, Nutrition, Water and Sanitation, and Health. Following the Secretary-General’s call to action on Famine response and prevention, donors have generously committed approximately 21 per cent of the $4.4 billion required. I thank donors for these critically needed funds to save lives, but highlight that they remain less than a quarter of the amount needed to avert a catastrophe.

    We thank the President of the General Assembly to have provided this dialogue today.

    While humanitarians will continue to deliver and scale up where they are able, four things are required in order to effectively reverse these crises:

    First, more political will is required to end the conflicts that have caused these crises. Without an end to conflict, violence, and violations of international humanitarian law, humanitarian conditions – including severe food insecurity – will continue to deteriorate. Hunger and suffering will increase.

    Likewise in order for assistance to reach those who need it most there must be unhindered and sustained humanitarian access. All parties to conflict must abide by international humanitarian law and allow aid workers access to vulnerable people in need of support. More pressure needs to be exerted on these parties to abide by those obligations.

    Thirdly, we urgently need further funding to back a robust humanitarian response. This includes funding from traditional and emerging donors, including development banks and the private sector. The upcoming ministerial-level pledging conference for Yemen, co-chaired by the Secretary-General and the Foreign Ministers of Switzerland and Sweden, provides an opportunity for countries to come together and unite behind humanitarian efforts in Yemen – for which less than 10 per cent of required funds have been received to date.

    Finally, the severity and the scale of these crises call for a more comprehensive approach, a new way of working. The immediate goal of the humanitarian response is to save lives, but humanitarian response alone is not enough to reduce needs and address the risk and vulnerability that drive those needs. Longer-term action is needed now to help reduce needs and vulnerability and build resilience, preventing future catastrophes. To do this requires more risk tolerance, earlier and sustained development engagement, and more flexible and context-adaptable programming. Crucially, a broader range of financing options, better aligning short- and long-term funding, and working with a diversity of partners will be needed. We must now make tangible progress on this New Way of Working by scaling up the programmes required to reach our collective outcomes of reducing need, risk and vulnerability of those left behind as a result of conflict and crises.

    Thank you.

    Distributed by APO on behalf of Office for Coordination of Humanitarian Affairs (OCHA).

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  • Minister of Police to Visit the Annual Ijtima

    The Minister of Police, Mr. Fikile Mbalula will tomorrow attend the Annual Ijtima (Islamic gathering) that will be held in Laudium, Pretoria.

    On his first address as the Minister of Police, Mr. Fikile Mbalula emphasized the need to partner with communities in the fight against crime. The Minister will use this opportunity to build partnerships with the religious community and reiterate his clarion call for society to unite against crime.

    The event is expecting over 40 000 Muslim Males making it the largest gathering of Muslims in Southern Africa.

    The Minister is expected to be at the venue as follows.

    Date:            Friday, 14 April 2017

    Time:            11:00 for 11:30

    Venue:        Laudium Sports Stadium, 19th Ave, Laudium.

    Distributed by APO on behalf of Republic of South Africa: Department of Government Communication and Information.

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  • IMF Staff Concludes Visit to Kenya

    End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

    • Kenya’s economy has continued to perform well, with real GDP growth reaching 5.9 percent in the first three quarters of 2016, up from 5.6 percent in 2015
    • Growth was supported by public investment spending, favorable weather in the first half of 2016, and a pick-up in tourism
    • Discussions focused on macroeconomic policies and structural reforms aiming to ensure the sustainability of investment-driven, inclusive growth

    A team from the International Monetary Fund (IMF), led by Benedict Clements, visited Kenya from April 3 to 13, 2017, to conduct Article IV consultations and hold discussions on the second reviews under a precautionary Stand-By Arrangement and a Stand-By Credit Facility (SBA/SCF).

    On March 14, 2016, the Executive Board of the International Monetary Fund (IMF) approved a SDR 709.259 million (about US$989.8 million) 24-month Stand-By Arrangement (SBA) and a SDR 354.629 million (about US$494.9 million) 24-monthStandby Credit Facility (SCF) for Kenya, for a combined SDR 1.06 billion (about US$1.5 billion, or 196 percent of Kenya’s quota). The first review was completed on January 25, 2017 ( see Press Release 17/23 ). The Kenyan authorities have indicated that they will continue to treat both arrangements as precautionary, and do not intend to draw on the new SBA and SCF arrangements unless exogenous shocks lead to an actual balance of payments need.

    At the end of the visit, Mr. Clements released the following statement:

    “Kenya’s economy has continued to perform well, with real GDP growth reaching 5.9 percent in the first three quarters of 2016, up from 5.6 percent in 2015. Growth was supported by public investment spending, favorable weather in the first half of 2016, and a pick-up in tourism. Inflation has increased to 10.3 percent in March, reflecting the reduced supply of key staple food items as a result of the drought, but is expected to decline as agricultural production returns to normal levels with the onset of the long rains. The banking system has remained stable, and reforms by the Central Bank of Kenya (CBK) to strengthen the financial system continue.

    “The external current account deficit (on a 12-month basis) narrowed to 5.5 percent of GDP in 2016 from 6.8 percent in 2015, reflecting lower oil prices, improved tea and horticulture exports, and increased remittance inflows. The exchange rate has remained stable and foreign exchange reserves have risen to US$7.8 billion (equal to 5.1 months of import cover) as of end-March 2017. The banking system has remained stable.

    “Discussions focused on macroeconomic policies and structural reforms aiming to ensure the sustainability of investment-driven, inclusive growth. The authorities reiterated their commitment to macroeconomic policies that would maintain public debt on a sustainable path, contain inflation within the target range, and preserve external stability. To that end, the IMF staff team urged the authorities to achieve the fiscal deficit target envisaged under the program for 2016/17, which accommodates a substantial increase in foreign-financed public investment.

    “The team urged the authorities to move forward with the substantial reduction in the budget deficit envisaged for 2017/18 and beyond, which will help put the debt on a declining path as envisaged under the program. The team also welcomed the authorities’ plans to accelerate reforms aimed at (i) mobilizing revenue to support appropriate delivery of government services at the national and county level; (ii) increasing the efficiency, transparency, and accountability of public spending; (iii) safeguarding financial stability by enhancing prudential regulation and supervision; and (iv) deepening structural and governance reforms to improve the business environment.

    “The IMF team reiterated its concerns regarding the legislated limits on deposit and lending rates introduced last September. Preliminary information suggests that these controls have had unintended negative consequences on the availability of financing for small and medium-sized enterprises, with the risk of reversing the remarkable increase in financial inclusion observed in recent years. In addition, interest rate controls are undermining the effectiveness of monetary policy aimed at ensuring price stability and supporting sustainable economic growth.

    “Significant progress was made during the visit, and discussions will continue in the coming weeks. The team thanks the authorities for their hospitality and constructive discussions.”

    The team met with the Cabinet Secretary for the National Treasury, Mr. Henry Rotich; the Governor of the CBK, Dr. Patrick Njoroge; the Principal Secretary for the National Treasury, Dr. Kamau Thugge; the Deputy Governor of the CBK, Ms. Sheila M’Mbijjewe, and senior government and CBK officials. Staff also had productive discussions with civil society organizations, representatives of the private sector, and development partners.

    Distributed by APO on behalf of International Monetary Fund (IMF).

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  • Ghana: Staff Concluding Statement of the 2017 Article IV Consultation Mission and Discussions for the Fourth Review under the Extended Credit Facility
    Concluding Statement describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘mission’), in most cases to a member country. Missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF's Articles of Agreement, in the context of a request to use IMF resources (borrow from the IMF), as part of discussions of staff monitored programs, or as part of other staff monitoring of economic developments.

    The authorities have consented to the publication of this statement. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF Executive Board for discussion and decision.

    An IMF mission visited Accra during April 3-13, 2017 to conduct the Article IV consultation and discussions on the fourth review under the Extended Credit Facility. Good progress was made on these discussions, which will continue in Washington DC.

    Key messages:

    • The authorities’ initial steps are promising, but more is needed. Resolving Ghana’s longstanding challenges demands ambitious and sustained reforms across key policy areas, going beyond central government’s operation to focus on the broader public sector.
    • The immediate priority is to ensure fiscal discipline, by targeting a budget deficit sufficient to place public debt on a clearly declining path.
    • More transparency and accountability—especially in the energy sector—will help reduce the drain on public resources, tackle inefficiencies, and send a credible signal about the government’s commitment to lasting change.
    • The financial system is overall adequately capitalized, though addressing weaknesses in some banks and microfinance institutions is necessary to improve the availability and affordability of credit to the private sector.

    Context and Outlook

    1. After years of mixed performance, Ghana now faces a unique opportunity to change course With the new administration having won a strong electoral mandate, there is scope to pursue the adjustment and reforms needed to restore macroeconomic stability and “create prosperity and equal opportunity for all”—which are among the government’s key priorities.

    2. Initial steps have been promising. The recently assembled economic team has brought new confidence; the 2017 budget limits earmarking and seeks to control exemptions and tax evasion; and the Ministry of Finance (MoF) is pursuing improvements in public financial management (PFM) to secure spending discipline. Investors’ response has been positive, with the exchange rate recovering in recent weeks after a rapid depreciation through end-February. The latest auction of government bonds saw a record level of issuance amid high foreign investor participation.

    3. More generally, economic prospects in 2017 are encouraging . Overall GDP growth is expected at about 6 percent in 2017, reflecting a strong increase in oil production, against the backdrop of the contractionary impact of the budgeted fiscal adjustment. Inflation is on a declining trend and projected to fall to the upper bound of the Bank of Ghana (BoG)’s target by year-end. Following the recent sizable FX inflows, the government plans to add $700 million to its net reserves in 2017, the largest increase since 2011 when oil production started.

    4. Significant challenges remain. The sizable fiscal slippage in 2016 (a budget deficit of 8.7 percent of GDP, more than 3 percent of GDP above target) has further undermined debt sustainability and increased Ghana’s reliance on foreign investors to fund its large gross financing needs, with possible pressures on the exchange rate if financing conditions deteriorate. Significant unpaid commitments incurred in 2016 (now being audited) and weaknesses in the financial position of state-owned enterprises (SOEs) in the utility sector could give rise to additional spending needs. And while the financial system is overall adequately capitalized, weaknesses in some banks and microfinance institutions could hamper credit growth and investment and create contingent liabilities for the government.

    5. A balanced set of policy measures is needed to anchor confidence and mitigate risk. The immediate priority is to entrench fiscal discipline in a credible adjustment path, going beyond the central government’s operations to encompass the broader public sector. Broad structural measures will need to support these efforts for adjustment to last.

    Implementing a Credible Fiscal Strategy

    6. In recent years Ghana’s public debt burden has risen significantly. Repeated fiscal slippages—especially in election years—have been the largest driver of the debt increase, with revenue shortfalls playing a key role in recent years.

    7. Persistent shortcomings in fiscal management in recent years reflect a number of factors:

    • Lack of transparency and accountability . Large quasi-fiscal activities and extra budgetary spending have made it difficult to assess the overall fiscal stance; and lack of formal mechanisms to strengthen budget credibility have led to spending overruns, particularly during election years.
    • Budget rigidities. Taken together, extensive revenue earmarking for statutory funds, high wage bills and interest payments exceed revenue, severely constraining fiscal space.
    • Revenue erosion . Pervasive exemptions and lack of compliance have weakened tax bases and collections.
    • Arrears accumulation . Partly related to the above, arrears have been a recurring problem, calling into question the government’s ability to manage its spending plans.

    8. In response, the government has taken a number of important measures. An audit of unpaid bills as of end-2016 is under way, and efforts to limit earmarking were codified in recently enacted legislation. The government has also removed some 50,000 persons from its payroll, reflecting the enforcement of biometric registration. The MoF has also started initiatives to address abuses of tax exemptions and strengthen the PFM system. In all these efforts, the MoF’s commitment to strict enforcement of legal provisions for uncovered unauthorized commitments and violations will help strengthen transparency and accountability.

    9. The 2017 budget targets a significant fiscal correction. This is planned to be achieved through strong revenue mobilization efforts together with strict expenditure prioritization measures. In the mission’s view, revenue targets are optimistic. However, the authorities have indicated their commitment to further adjustment should the need arise to attain the 2017 budget deficit target of 6.5 percent of GDP. In the mission’s view, the key objective is to achieve a budget deficit sufficient to reverse unfavorable debt dynamics, which might require additional adjustment. While the revenue administration measures included in the budget are a step in the right direction, they will need to be supported by more policy changes to make a lasting impact.

    10. Wide-ranging fiscal reforms are needed to underpin fiscal adjustment. The important initiatives noted above need to be pursued decisively, especially PFM improvements to integrate all spending agencies under the Ghana Integrated Financial Management Information System (GIFMIS) and streamline budget processes to take account of increasing automation; to ensure better oversight of payroll across agencies; and to reconcile and rationalize bank accounts through swift implementation of the Treasury Single Account (TSA). Stronger monitoring and control of cash balances will improve cash management and help reduce borrowing, leading to better budget execution and sounder debt management.

    11. The revamped PFM reform agenda deserves full attention. Ghana’s fiscal challenges have long been known and, accordingly, the proposed solutions have long been on the table and are thus welcome. In the mission’s view, the government should step up efforts to complete ongoing revenue administration and PFM reforms, with the overall objective of strengthening the MoF’s capability in formulating, executing, and monitoring budget policies. In that context, the MoF has initiated the process of strengthening its capacity in the areas of Treasury and Risk Management, and will create a special department to enforce the Public Finance Management Act. The PFM Act approved in 2016 includes key initiatives to strengthen fiscal transparency and accountability—such as the preparation of a Fiscal Strategy Document and a Fiscal Risk Statement. When fully implemented, these would shift the focus to a broader coverage of fiscal operations and help formulate fiscal policy in the context of a multi-year fiscal anchor.

    12. The SOE utility sector poses significant fiscal risk. The Energy Sector Levy Act (ESLA) introduced in 2016 has helped restructure debt obligations to domestic banks. But the sector’s debt reached an estimated $2.4 billion (over 6 percent of GDP) at end-2016, and the continued accumulation of losses and lack of discipline in ensuring timely payments of bills will eventually add to the debt stock, dwarfing ongoing debt restructuring efforts and requiring additional government support. The MoF’s efforts to monitor the SOE sector more systematically are welcome—these should pave the way to adopting concrete measures to ensure the SOEs’ financial viability. In this context, the ongoing financial audit of SOEs should be concluded without delay.

    13. Prudent debt management can help secure the government’s financing needs at reasonable cost and reduce debt sustainability risk. Gross financing needs remain sizable in 2017 (equivalent to 13 percent of GDP) and the exposure to foreign investors (about a quarter of total debt) is large. This calls for a financing strategy that reduces refinancing and exchange rate risk. The mission supports the government’s medium-term debt management strategy to rely primarily on domestic currency financing while lengthening maturities and pre-finance annual borrowing needs to avoid temporary cash shortfalls. Over time, planned liability management operations will help reduce refinancing risk.

    Strengthening Monetary and Exchange Rate Policies

    14. The BoG has made progress in strengthening its inflation targeting (IT) regime. Reforms to the monetary operations framework have led to the monetary policy rate (MPR) and interbank rate to fall into line, strengthening the monetary transmission mechanism. However, inflation has frequently exceeded the BoG’s target, primarily reflecting fiscal slippages. As fiscal dominance remains a key medium-term risk to inflation, continued adherence by the BoG to zero financing to the government would be key to anchoring the IT framework’s credibility. In the mission’s view, this practice should eventually be codified in legislation to make it robust to policy changes.

    15. Headline inflation has continued to decline, but the BoG should remain vigilant . As disinflationary signs grew stronger, the BoG recently lowered the monetary policy rate (MPR) by 200 basis points. In the mission’s view, going forward, the BoG should proceed cautiously given potential upside risks to inflation, by avoiding large unexpected changes and carefully managing market expectations.

    16. There is a pressing need to develop a coherent and transparent foreign exchange (FX) policy . For the IT framework to be fully effective, the BoG’s FX intervention policy should be limited to smoothing exchange rate volatility rather than supporting directly the value of the cedi. At the same time, the BoG should continue its efforts to develop and deepen the FX market, building on progress achieved last year when surrender requirements for gold and cocoa export proceeds were eliminated and FX auctions were introduced. The authorities are of the view that the FX auctions have not worked well, and as result the last auction was canceled. In the mission’s view, the FX auctions, if properly implemented, will help increase transparency and price discovery in the market.

    Preserving Confidence in Ghana’s Financial Sector

    17. The BoG has taken important steps to bolster financial sector resilience. The BoG conducted an Asset Quality Review (AQR) and began implementing a Roadmap for Financial Stability, which will address shortfalls in provisioning and capital, tighten the provision of emergency liquidity assistance (ELA) to banks and reduce risk concentration by enforcing large exposure limits These steps will be supported by a new Banks and Specialized Deposit-Taking Institution (SDI) Act which came into force in early 2017 and provides the BoG with enhanced supervisory and resolution powers.

    18. Decisive action is needed to address existing and emerging weaknesses .

    • Banks with capital shortfalls according to the AQR should prepare credible and time-bound recapitalization plans for BoG’s approval, in line with the timetable specified in the Banks and SDI Act. Further actions will be determined based upon a review of the plans. Inaction would adversely impact credit and the real economy, financial deepening, and ultimately lead to quasi-fiscal costs to the BoG; it would also create moral hazard, undermining banks’ discipline.
    • The ELA guidelines should be strictly enforced, including by requiring banks to provide collateral and implement repayments plans; large exposures should be aligned with regulatory limits.
    • Emerging problems in microfinance institutions (MFI) require immediate attention. The BoG should formulate a master plan for strengthening the MFI sector and its supervision, and quantify restructuring costs so that public sector backstops, if needed, can be established.

    19. Credibility ultimately rests on decisive actions—and the time for action is now. Collaboration across institutions will be necessary to guarantee success—a good place to start would be the reconciliation of data to bring more transparency and strengthen policy formulation. As inevitably trade-offs will emerge and the pace of policy initiatives’ implementation will need to be tailored to the available fiscal space, effective communication at every step will be essential to manage expectations and strengthen ownership of the government’s policy agenda. There is a need to maintain the reform momentum in order to anchor the newly restored market confidence.

    The mission met with Vice President Mahamudu Bawumia, Senior Minister Yaw Osafo-Maafo, Minister of Finance Ken Ofori-Atta, Governor Ernest Addison, members of Parliament, other public officials, representatives of the private sector and development partners. The mission is grateful to the authorities for their warm hospitality, excellent cooperation and open and constructive discussions. It looks forward to continuing program discussions in Washington DC.

    Distributed by APO on behalf of International Monetary Fund (IMF).

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