Ghana’s Finance Minister, Ken Ofori-Atta, has welcomed the recent release of the second tranche of the International Monetary Fund’s (IMF) extended credit facility.
The approval of an additional $600 million for Ghana’s bailout program is seen as a significant endorsement of the country’s economic reform efforts.
In a statement, Minister Ofori-Atta expressed his satisfaction, stating, “The IMF’s endorsement of the first review of our program is a resounding affirmation that the program is advancing steadily, and our reform trajectory remains steadfast.”
This positive assessment has resulted in the release of $600 million from the IMF, with the World Bank set to disburse an additional $300 million.
The IMF’s Executive Board completed the first review of Ghana’s $3 billion, 36-month Extended Credit Facility (ECF) Arrangement, initially approved in May 2023. The immediate disbursement of $600 million signifies a crucial milestone in Ghana’s economic journey. The total disbursements under the arrangement now amount to approximately $1.2 billion.
The press release from the IMF highlighted the significance of this disbursement, stating, “The completion of the first ECF review allows for an immediate disbursement of SDR 451.4 million (about US$600 million).” This injection of funds is expected to further support Ghana’s economic stability and development initiatives.
The recent financial boost comes on the heels of Ghana’s successful negotiations with bilateral lenders, including China and France, last week. Securing these deals played a pivotal role in unlocking the second tranche of funds, underscoring the importance of international cooperation in Ghana’s economic resurgence.
Executive Board of IMF Completes the First Review
The Executive Board of the International Monetary Fund (IMF) completed the First review of the $3 billion, 36-month Extended Credit Facility (ECF) Arrangement, which was approved by the Board on May, 17, 2023 , as well as the 2023 Article IV Consultation with Ghana.
The completion of the first ECF review allows for an immediate disbursement of SDR 451.4 million (about US$600 million), bringing Ghana’s total disbursements under the arrangement to about US$1.2 billion.
Ghana’s economic performance has been marked by significant volatility over the years. Episodes of strong growth and overall macroeconomic stability were undermined by rising inflation, exchange rate depreciation, and loss of external buffers, in turn largely reflecting overly accommodative fiscal policies.
Most recently, severe external shocks compounded pre-existing fiscal and debt vulnerabilities, exacerbating such volatility and leading to acute economic and financial pressures in 2022.
The authorities’ reform program has been designed to respond to immediate pressures and pave the way for a more resilient and prosperous economy. The ECF arrangement has provided a framework to implement the authorities’ policy and reform strategy to restore macroeconomic stability and debt sustainability, address long standing vulnerabilities, and lay the foundations for higher and more inclusive growth.
Ghana’s performance under the program has been strong. All quantitative performance criteria for the first review and almost all indicative targets and structural benchmarks were met.
This approval marks a notable achievement for Ghana, indicating the country’s adherence to the terms and conditions outlined in the Fund program. Having received the initial tranche in May of the previous year, this successful review positions Ghana as a beneficiary of ongoing financial support, further propelling the nation’s economic growth and stability.
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