The Executive Board of the International Monetary Fund (IMF) has approved a final loan of about 39 million dollars to become available to the country before Tuesday, October 31. The Board approved the amount after completing the sixth and final review of Ghana's economic performance under a Poverty Reduction and Growth Facility (PRGF) arrangement that expires on October 31. A statement on the IMF website said the Board also approved Ghana's request for waiver for the non-observance of the quantitative performance criterion on the net domestic assets of the Bank of Ghana for end-June 2006. Ghana's three-year PRGF arrangement was approved on May 9, 2003 for about 272.7 million dollars. Mr. Takatoshi Kato, Deputy Managing Director and Acting Chairman, said economic performance continued to improve in Ghana during the first half of 2006, supported by strong macroeconomic policy implementation and a favourable external environment. “Growth is relatively strong, inflation is falling, and the external position has strengthened considerably, allowing a build-up of international reserves that provides a cushion against shocks. “Ghana's program implementation during the PRGF-supported programme has been satisfactory.” Mr Kato said fiscal policy appeared on course in 2006 to deliver the targeted reductions in the ratio of domestic debt to GDP. The fiscal consolidation that had occurred during the PRGF-supported programme had resulted in a significant reduction in domestic debt service and allowed the crowding-in of private sector investment through continuing declines in interest rates, while increasing poverty-related spending, he said. "Monetary policy is expected to remain firm, geared toward achieving single-digit inflation. Ghana has made important strides in financial sector reforms, including eliminating the secondary reserve requirement for banks. “These reforms will help make the banking system more efficient, and encourage financial deepening and growth of private sector credit.” Mr Kato said further structural reforms were needed to support efficiency and growth prospects. He said as part of the agenda to strengthen transparency and economic governance, recent improvements in fiscal reporting and public expenditure management would contribute to the efficient use of resources—including those from debt relief—in line with the government's poverty reduction strategy. While the recent move to monthly review of petroleum product prices should improve the financial and operational performance of the Tema Oil Refinery, the authorities should execute, in the near future, their plan to divest a majority of government shares in the refinery, Mr Kato said. He noted that the government's economic strategy was now focused on accelerating growth, in the context of a relatively stable macroeconomic framework. Mr. Kato said looking forward, the main challenge for Ghana was to find the necessary resources to undertake the investment plan, while preserving debt sustainability. “The authorities have indicated they will exercise great caution in contracting new loans, particularly given the risks to the medium-term outlook and continuing vulnerability to shocks." Mr. Kato said. The PRGF is the IMF's concessional facility for low-income countries. PRGF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in the Poverty Reduction Strategy Paper (PRSP). This is intended to ensure that PRGF-supported programs are consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5½-year grace period on principal payments. Source: GNA