afrol News, 23 October - The Ghanaian government yesterday was given a euro 42 million loan to implement its Poverty Reduction Strategy (GPRS), which was approved in February this year. The credit principally will be used for structural reforms such as improving governance, public sector management and privatisation.

The African Development Fund (ADF) yesterday approved a loan of US$ 49.4 million to finance the Poverty Reduction Strategy for the period 2003 to 2005 in Ghana, according to a statement released by the Fund.

The Strategy was finalised by the Ghanaian in collaboration with the World Bank in February and is now the guiding framework for government policies and external support from donors. It is also demanded by international finance institutions whenever Ghanaian authorities seek to obtain a major credit.

As is typical for the so-called Poverty Reduction Strategies existing in almost every developing country, the main focus is on structural reforms, believed by the World Bank to improve general economic conditions, thus leading to economic growth and further to poverty reduction.

According to the ADF release, the new credit to Ghana is to "provide budget support to the government of Ghana and will focus on the governance and public sector management aspects," which are seen as essential for implementing the Strategy.

The loan is meant to help support an improved framework for public sector management with respect to public finance management, translation of the Poverty Strategy into the budget, public sector reform, decentralisation, and economic governance.

This "improved framework" is expected to lead to several results for Ghana's macro-economy. According to ADF, "resources will be more efficiently used leading to improved financial management," and "a more effective management through the budgetary operationalisation of the GPRS."

Corruption-plagued Ghana would also achieve "an enhanced public sector accountability and transparency through good political and economic governance especially the improvement of the public sector procurement system," if the programme is well implemented.

According to ADB, "the measures supported by the loan will provide an improved environment for economic growth, social and human development and poverty reduction," which is the basic concept of poverty reduction strategies all over the world.

After the Strategy was approved in February, a group of several donor countries and institutions has met to agree on how best to aid Ghana in achieving its aims in the 2003-05 period. In addition to ADB, the World Bank, Britain, Canada, Denmark, the European Union, Germany, Netherlands and Switzerland belong to Ghana's donor group.

ADF had agreed with the other donors of the group on granting the current loan, which also was the Fund's first budget support loan to Ghana. The loan will be released in two instalments, the first disbursement to be made already this year.

While ADF praised the Ghanaian government for its "significant efforts ... in implementing the reform measures," little mention was made on specific needs that may be prevalent in the West African country.

Ghana's Poverty Reduction Strategy, which is its most important economic strategy for years to come, has been subject to very little public debate in the country. It is mostly following World Bank standards.

The most significant public debate over the strategy has been on occasions when government has tried to implement controversial privatisation efforts - an obligatory requisite in these strategies - in particular over water privatisation, which has led to civil society protests.

By staff writer

© afrol News

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