Ghana: All eyes on external debt restructuring

The International Monetary Fund (IMF) has praised Ghana for making remarkable progress in meeting targets of the Fund’s Extended Credit Facility programme but noted that it will need financing assurances from Ghana’s external creditors to unlock the third tranche of about $360million.

This means government will have to complete negotiations speedily with its development partners and get them provide assurances to give IMF the greenlight to disburse the money.

The International Monetary Fund (IMF) last Friday ended the second review of Ghana’s economic programme with the Fund lauding achievements of governments in keeping to the dictates of the programme.

“Given Ghana’s strong progress under the IMF-supported programme, the next key step for the country is to reach an agreement with its official bilateral creditors on an MoU consistent with the terms agreed in January 2024. We look forward to the authorities’ continued efforts to reach an agreement with all creditors in line with programme parameters,” a statement from the Bretton Woods Institution said at the end of the review.

The statement quoted Head of the IMF Mission as saying that “performance under the IMF-supported programme has been generally strong, with most quantitative targets met. Good progress has also been made on the key structural reform milestones.

The IMF statement said that policies and reforms to restore macroeconomic stability and debt sustainability while laying the foundations for stronger and more inclusive growth were already generating positive results.

Upon completion of the Executive Board review, Ghana would have access to about US$ 360 million, bringing the total IMF financial support disbursed under the arrangement since May 2023 to about US$ 1,560 million

“Economic activity in 2023 was more robust than initially envisaged, and growth projections for 2024 will be revised upward. Monetary policy has remained appropriately tight, allowing for inflation to decline rapidly.

On the fiscal front, the IMF said consistent with Ghana’s commitments under the IMF-supported programme the fiscal primary balance on a commitment basis improved by over 4 percentage points of GDP in 2023 and is on track to achieve a fiscal primary surplus of ½ percent of GDP in 2024.

“Spending has remained within budget limits, while the authorities have significantly expanded social protection programs to help mitigate the impact of the crisis on the most vulnerable. Ghana has met its non-oil revenue mobilization target, while making progress in implementing ambitious structural fiscal reforms to bolster domestic revenues, strengthen public financial and debt management, and enhance transparency,” the Fund stated.

The external sector had improved significantly, with international reserve accumulation ahead of program objectives. Financial stability has been preserved, with banks posting solid profits in 2023.

Ghana’s Finance Minister , Dr Mohammed Amin Adam noted that Ghana’s medium-term macroeconomic outlook and prospects continue to be positive and promising, with the government maintaining its commitment to implementing comprehensive structural reforms to support growth, improve the public financial management system, improve revenue mobilisation, and support sound monetary and exchange policy.

The Minister gave the assurance, government would control expenditure, especially in an election year.