World Bank approves US$ 535million package for Ghana

World Bank approves US$ 535million package for Ghana
-To support economic governance, macro-economic stability, and others
Masahudu Ankiilu Kunateh, Ghanadot

Accra, July 1, Ghanadot - The Board of Directors of the World Bank today approved a total of US$535 million to support three credit facilities aimed at helping improve economic governance and stabilizing Ghana’s economy.

They are: Economic Governance and Poverty Reduction Credit (EGPRC) US$300 million, Transport Sector Project US$225 million Natural Resources and Environmental Governance (NREG) US$ 10 million.

These first set of credits are part of US$1.2 billion the Bank plans to support the government of Ghana with over the next three years.

The government is currently faced with a difficult macro-economic situation, the consequence of combination of domestic and external shocks (fuel and food crisis, droughts and floods in the North, financial crisis and global slowdown) which revealed and exacerbated a number of structural challenges in the public sector in general, and in the energy sector in particularly, and which, if left un-tackled, would undermine Ghana's growth and development prospects.

The Government has indicated its willingness to undertake necessary reforms. Recognizing the severity of the situation and the related financing gaps, the Government requested assistance from the World Bank in April 2009.

In the words of Ghana’s Minister of Finance and Economic Planning, Dr. Kwabena Duffuor, “These resources could not have come at a better time. We have been working hard to minimize the impact of the global financial crunch on our people and these facilities will go a long way in supplementing our internal revenue generation and poverty reduction efforts. It is our duty as a government to bring the macroeconomic situation back on track, and we are committed to implementing appropriate measures in this regard.”

Economic Governance and Poverty Reduction Credit (EGPRC) – ($300m)

This credit is a budget support operation which aims to assist Ghana’s efforts to bring the fiscal situation back on a sound and sustainable track while protecting the development objectives set forth in Ghana’s Second Growth and Poverty Reduction Strategy (GPRS II) for the period 2006-2009.

The credit will be disbursed in two tranches. The first tranche of US$150 million will be disbursed immediately the financing agreement is signed by the government and the World Bank in early July 2009. The second will take place in the third quarter of 2009, immediately after the Government has completed the actions it has committed to take.

These actions include: Relating to the budget-establishing a single treasury account, improving compliance with the public procurement law, correcting any budget deviations , among others.

Structural measures: reconstituting the Boards of energy related regulatory utilities and authorities, adopting an electricity sector financial recovery plan, adopting draft legislation on the Ghana Petroleum Regulatory Authority and Oil and Gas Fiscal Regime, designating a leader in Government for the Public Sector Reforms agenda, and eliminating ghost workers in health and education services.

Protecting the poor: extending the number of Livelihood Empowerment Against Poverty (LEAP) beneficiaries, and reviewing the effectiveness of pro-poor expenditures by revising their classification.

According to Ishac Diwan, World Bank Country Director for Ghana, “it is important to stress that these are not externally imposed conditionalities. These are actions that the government has decided to undertake in order to ensure fiscal prudence, transparency and accountability in the delivery of services. We all, citizens, Parliament and Development Partners alike, need to be vigilant and play our parts in promoting value for money in the disbursement of hard earned resources.”

Transport Sector Project - ($225m)

The objective of this project is to improve mobility of goods and passengers through reduction in travel time, vehicle operating cost, and implementation of safety strategy. This objective will be achieved through strengthening the capacity of transport institutions in planning, regulation, operations and maintenance.

The Government has developed a Transport Sector Development Programme as the successor program to the Road Sector Development Programme, setting out an integrated program of development activities for Ghana’s Transport Sector for the period 2008-2012. This project supports implementation of the Program.

Project components include: Improvement of Trunk Roads ($64.0m): This will be implemented by the Ghana Highway Authority and consist of rehabilitation of a major trunk road from Ayamfuri-Asawinso (52 km) to establish a South-North transport corridor in the West of Ghana.

Improvement of Urban Roads ($78m): This component will be implemented by the Department of Urban Roads and consists of rehabilitation of the Burma Camp and Giffard roads, and the financing of urban transport infrastructure such as depots, terminals, and access facilities to the planned Bus Rapid Transit system in Accra. Improvement of Feeders Roads ($50.5m): This component will help in improving rural access through efficient and sustainable feeder roads reconstruction, rehabilitation, and maintenance.

“For Ghana to continue to play its role as the gateway to West Africa, the development of transport infrastructure remains at the centre. A better transport system will improve access to markets and will encourage farmers to improve the quality and quantity of their produce. Capacity building to enhance the performance of key institutions in the roads, aviation, maritime and railway subsectors will be emphasized,” says Ishac Diwan.

Natural Resources and Environmental Governance Credit - ($10m)

This is the second in the series of 3 Development Policy Operations (DPOs) for the period 2008-2010. It is a sector budget support operation targeting the natural resources and the environmental sectors. The first operation was prepared and executed in 2008. The objectives of the three series of operations are to (a) ensure predictable and sustainable financing for the forest and wildlife sectors and effective forest law enforcement; (b) improve mining sector revenue collection, management, and transparency; (c) address social issues in forest and mining communities; and (d) mainstream environment into economic growth through Strategic Environmental Assessment (SEA), Environmental Impact Assessment (EIA), and development of a Climate Change Strategy. This facility will be disbursed in a single tranche as soon as the credit agreement is ratified by Parliament and a legal opinion is provided by the Attorney General’s Department.

Ghanadot