The International Monetary Fund (IMF) said its $918mn 3-year loan programme with Ghana remains on track, with virtually all performance criteria met. The fund, which made its first review of the bailout programme, praised the authorities for their commitment to ambitious fiscal consolidation and structural reforms, but urged further efforts to improve revenue collection and constrain current spending, mainly on wages.

“More needs to be done to further enhance tax administration and eliminate tax exemptions to improve the revenue performance over the medium term,” the IMF mission leader Joël Toujas-Bernaté said in a statement. “The success of the program critically hinges on continued spending moderation, in particular the wage bill with stricter control of the payroll being put in place. […] Making public the strategy for the 2016 budget and wage negotiations consistent with this framework will go a long way in restoring market confidence and lowering financing costs.”

The fund reiterated its 2015 GDP growth forecast of around 3.5%, underpinned by higher oil output, partly offset by low cocoa and gold production. A stronger growth next year is expected to be backed by new private financed power plants in the coming months, which should address severe electricity shortages.

The IMF noted that Ghana’s annual inflation, at 16.9% in May, remains higher than expected due to larger than projected depreciation of the cedi and rising oil prices.

The IMF welcomed the Bank of Ghana’s move to raise its policy rate by 100bp to 22% in May, saying it was needed to bring inflation down towards its medium term target, which would also contribute to stabilising the cedi.

“Budget support from development partners (which has started to be disbursed), the financing of the next cocoa crop, the new Eurobond and the gradual switch to gas in the production of electricity should also reduce pressures on the foreign exchange market and allow the central bank to rebuild its external reserves to a higher level than programmed by year-end,” the fund said.