US embassy cable - 03ACCRA611

C O N F I D E N T I A L SECTION 01 OF 02 ACCRA 000611 
 
SIPDIS 
 
E.O. 12958: DECL: 03/21/2013 
TAGS: EAID, GH 
SUBJECT: IMF REP'S PRIMARILY POSITIVE READOUT 
 
 
Classified By: Ambassador Mary Carlin Yates for reasons 1.5 (b) 
 and (d) 
 
1. (SBU) Summary: Ambassador Mary Carlin Yates and econoff 
visited Enrique de la Piedra, the IMF Resident Representative 
on March 20. De la Piedra offered a positive readout of the 
Budget now under Parliamentary review and Multiple Donor 
Budget Support. The Resident Representative finds affinity 
with his working level colleagues and leadership in the Bank 
of Ghana and the Ministry of Economic Planning and Regional 
Cooperation, finds it occasionally difficult to work with the 
Ministry of Finance and is wary of the messages put out by 
the Minister of Trade and Industry.  End Summary. 
 
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The Budget 
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2. (U) Despite the surprise tariff increases, de la Piedra 
was very positive about the Budget (septel). The IMF was 
looking for adequate revenue mobilization (i.e. taxes) effort 
and zero domestic debt financing. The IMF also is seeking 
better expenditure controls.  There are revenue enhancement 
measures in the budget that please the IMF. He also noted 
that the government understands that it cannot encourage 
investment if banks realize bigger gains assuming government 
debt instead of lending to local businesses. The GoG's 
spending will have to come under control. De la Piedra was 
slightly concerned about timing, as control of domestic debt 
and expenditure and revenue mobilization are usually more 
difficult in an election year. 
 
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Multi Donor Budget Support 
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3. (U) The Ambassador asked about Multi Donor Budget Support 
(MDBS) in Ghana and pointed out that better coordination 
between donors is a logical step.  The Resident 
Representative sees Multi Donor Budget Support as an overall 
plus for both sides. The Government of Ghana saves on 
transaction costs for financing projects and the donors 
increase their clout in Ghana and the region. De la Piedra 
cautioned that the only way MDBS will work is if the GoG uses 
the funds adequately to address the needs of the Ghanaian 
people. The money will not be available in the future if the 
funds are misused now. The Ambassador did not share the 
current position of USAID that the USG will not be able to 
sign this framework agreement but this was stated at the 
March 24 Mini-CG held in Accra. 
 
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Bank of Ghana 
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4. (U) De la Piedra, The International Monetary Fund Resident 
Representative, described himself as a link between the IMF 
team in Washington, the Government of Ghana and the donor 
partners. He has good relations with his interlocutors at the 
Bank of Ghana (BOG), noting that Bank Governor Paul Acquah 
and his special assistant, Mahamadou Bawumia speak the same 
language as the IMF. He commented that the Bank Governor is 
doing well in a difficult job. De la Piedra noted how the 
tables have turned for Acquah, a 20-year veteran of the IMF, 
now answering to Ghana's market and political pressures as 
well as the donor community. Overall, de la Piedra believes 
the BOG is on the right track. It is keeping monetary policy 
under tight control and working to improve the financial 
market (i.e., Acquah's work to improve the FOREX market). 
 
5. (U) The more difficult issue, according to de la Piedra, 
is restructuring the Bank of Ghana itself. Ambassador Yates 
noted Acquah's concern about capturing more of the funds that 
are currently outside the banking system. De la Piedra 
responded, saying that the primary concern should be the 
market itself, i.e., what is in the banking sector, not what 
is not. The Bank needs to create incentives for people to 
bring their money into the formal banking sector. 
 
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Ministry of Economic Planning and Regional Cooperation 
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6. (C) De la Piedra's primary concern is the linking of the 
Ghana Poverty Reduction Strategy to the Budget, a difficult 
task due to the internal wrangling between Minister of 
Economic Planning and Regional Cooperation Paa Kwesi Nduom 
and the Minister of Finance, Yaw Osafo-Maafo. De la Piedra 
also confided that there is some suspicion that Nduom, a 
minority party candidate (Convention People's Party) from 
Cape Coast, was awarded his position because he was "robbed" 
of the Parliamentary seat. Nevertheless, Nduom is doing well 
with a small but talented staff. De la Piedra also weighed in 
the Cabinet shake-up rumors that have plagued the Kufuor 
Administration for the last year and half by noting that 
Nduom has been mentioned as a replacement Minister of Finance 
should Osafo-Maafo stumble. 
 
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Ministry of Finance 
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7. (SBU) While he found the BOG pragmatic, he observed the 
Minister of Finance Osafo-Maafo and his Special Assistant 
Tony Osei to be primarily politically motivated. De la Piedra 
noted that during the rocky period between the IMF and the 
GoG last fall, it was difficult to get on the same page as 
the Finance Minister regarding the problems with the budget 
overruns. 
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Ministry of Trade and Industry 
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8. (C) Most worrying to de la Piedra is the Minister of Trade 
and Industry Kofi Konadu Apraku. De la Piedra sees a trend in 
Apraku's public speeches and comments that is not good. De la 
Piedra saw the rice and chicken tariff increases in the 
budget as the handiwork of Minister Apraku. De la Piedra 
warned that we (the international donor community) need to 
apply more pressure on the tariff issue to ensure that Ghana 
does not go that route. (Note: The Ambassador raised the 
issue and our concerns about the augmented tariffs on rice 
and poultry with the Minister of Agriculture on March 26, but 
with little satisfaction.) The domestic content bill is 
another example of Apraku's artful vilification of trade 
liberalization policies. While the bill will conform in 
language to Ghana's bi- and multi- lateral contractual 
obligations, domestic firms will be given more help 
(unspecified). 
YATES