ACCRA, Oct 6 (Reuters) – In a significant development, the International Monetary Fund (IMF) and the government of Ghana have successfully concluded a staff-level agreement pertaining to the inaugural review of a $3 billion loan program. This agreement marks a pivotal step toward the disbursement of $600 million, which awaits final approval by the IMF’s executive board.Thank you for reading this post, don't forget to subscribe!
To expedite the completion of the review process, the IMF underscored the necessity for official creditors to promptly arrive at a consensus regarding debt treatment, in alignment with the financing commitments they made in May 2023. This call was made in an official statement issued by the IMF on Friday.
Ghana sought financial assistance from the IMF last year, grappling with its most severe economic crisis in decades, driven by a surge in public debt. The three-year extended credit facility is contingent upon actions such as domestic and external debt restructuring, spending reductions, and other fiscal adjustments. Ghana had already received the initial tranche of $600 million from this loan in May.
The IMF highlighted that economic growth had displayed greater resilience than initially anticipated. This was evidenced by declining inflation rates, a more stable exchange rate, and improved fiscal and external positions.
Furthermore, Ghana is on track to reduce its fiscal primary deficit commitment by approximately 4 percentage points of GDP in 2023. The country has also managed to keep spending within the program’s stipulated limits.
In its ongoing efforts, Ghana is engaged in negotiations with both bilateral and commercial international creditors. The aim is to achieve a reduction of approximately $10.5 billion in interest payments on its external debt over the next three years. As of the close of 2022, the country had debts to nations including China and members of the Paris Club of creditor nations amounting to $5.4 billion, out of a total of $20 billion in external debt scheduled for restructuring. Ghana’s overall external debt stood at roughly $30 billion.
Notably, the prices of Ghana’s international dollar bonds saw an increase of up to 0.9 cents on the dollar on Friday. This gradual rise since March reflects optimism surrounding a potential debt restructuring agreement, albeit with a minor setback earlier in the week due to a global debt market sell-off.