Implications of Quasi-Fiscal Activities in Ghana

Abstract

This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper assesses the scope and coverage of quasi-fiscal activities (QFAs) in Ghana. We find that while QFAs have been reduced recently, they remain significant. The extensive nature of these activities has several macroeconomic and structural policy implications. An extended measure of public sector operations, including QFAs, presents a clearerpicture of Ghana's fiscal stance and fiscal adjustment from one for the central government alone; QFAs have led to serious distortions in energy and water consumption; and they have distorted the investment decisions of both public enterprises and the private sector.

Financial Viability of Electricity Sectors in Sub-Saharan Africa: Quasi-Fiscal Deficits and Hidden Costs

“…They developed a methodology to value various aspects of the quasi-fiscal activities and applied it to the energy sector in Azerbaijan and the gas sector in Ukraine. A similar analysis for the power and water sectors in Ghana was carried out by Chivakul and York (2006). Saavalainen and ten Berge (2006) and Ebinger (2006) extended the approach of Petri, Taube, and Tsyvinski to provide estimates of the quasi-fiscal deficits (QFDs) of the power sectors in countries in Europe and Central Asia.…”

Quasi-Fiscal Deficit in Non-Financial Enterprises

“…Petri, Taube, and Tsyvinski (2002) propose two ways of evaluating the QFD in the energy sector-an end-product approach and a financial balance approach. Finally, two recent papers-by Chivakul and York (2006) and Saavalainen and ten Berge (2006)-apply this methodology to the cases of Ghana and the Commonwealth of Independent States (CIS) countries. This paper takes another look at the methodology proposed by Petri, Taube, and Tsyvinski and discusses the link between the two estimation methods.…”