President Nana Addo Dankwa Akufo-Addo has sought the help of Japan to enable Ghana reach an agreement with the International Monetary Fund (IMF) Board for the 3 billion-dollar balance of payment support.
Japan, which is a member of the Paris Club, has a major role to play in Ghana securing the IMF deal, as stated by Akufo-Addo. Moreover Akufo-Addo speaking with the Japanese Prime Minister, Fumio Kishida, who made a stopover at the Jubilee House on Monday evening, claimed Ghana will repay Japan’s support. “Ghana is also counting on the support of Japan in reaching a favourable agreement with the International Monetary Fund, which will pave the way for the robust recovery of Ghana’s economy,” President Akufo-Addo averred.
In July 2022, Ghana requested for a three-year, US$3bn extended credit facility (ECF) from the IMF. An arrangement was agreed with the IMF in December 2022, with the aim of restoring credibility among investors, building reserve buffers and improving fiscal and debt sustainability. However, debt restructuring needs to be agreed upon with Ghana’s external creditors, before the IMF’s Executive Board can sign off on the ECF.
Meanwhile, Ghana’s hope of securing an IMF board approval is expected to delay, owing to prolonged external debt-restructuring negotiations, and the involvement of numerous stakeholders in the process, according to the Economic Intelligence Unit (EIU).
The EIU in its 2023 Country Report on Ghana, stated that it anticipates Ghana to secure restructuring agreements on its public external debt during 2023-24, involving official and private creditors alike. It however, notes that, given the country’s pressing macroeconomic crisis, “the conclusion of a domestic debt-swap operation in February and increasing international attention on speeding up external debt restructurings, our core forecast remains that the IMF programme will be approved by mid-2023.”
“We expect Ghana to secure restructuring agreements on its public external debt during 2023-24, involving official and private creditors alike. This will include a combination of write-offs, maturity extensions and reductions in interest rates. We expect official creditors to agree to a deal in 2023, and this, combined with the domestic debt restructuring that has already been secured, should provide enough reassurance to reduce Ghana’s risk of debt distress and allow the IMF to approve the agreed programme. However, there is a material risk that IMF board approval will be delayed, owing to prolonged external debt-restructuring negotiations, given the involvement of multiple stakeholders in the process.”
EIU
Fumio Kishida Pledges $500M To Support Africa’s Finances
Fumio Kishida, the Japanese Prime Minister during a meeting with Nana Addo Dankwa Akufo-Addo, promised to provide around $500 million in financial support to Africa to promote peace and stability on the continent, over the next three years.
Kishida and President Nana Addo Dankwa Akufo-Addo also confirmed the importance of providing transparent and fair development finance, apparently drawing a contrast with China’s so-called “debt trap” finance, where recipient countries are saddled with heavy loans they cannot repay.
Following their talks in the Ghanaian capital, Kishida said at a joint press conference that economic growth “cannot be achieved without peace and stability,” promising to support countries in the Sahel region of Africa, which continues to face threats from Islamic extremists.
Kishida, who is making a weeklong tour of Africa from Saturday, added he will hold discussions on the region at the Group of Seven summit in his home constituency of Hiroshima, later this month. The Sahel is located in the southern part of the Sahara Desert.
On the diplomatic front, Kishida and Akufo-Addo criticized Russia’s invasion of Ukraine, sharing the view that any act that runs counter to the U.N. Charter and its call for all members to refrain from the threat or use of force is unacceptable.
Kishida also agreed with Akufo-Addo to work closely to address the ongoing conflict in Sudan, since both Japan and Ghana currently serve as non-permanent members of the U.N. Security Council. He vowed to support Ghana in fields such as investment from Japan, infrastructure and human resource development, increasing rice production, and food security.
Moreover, Akufo-Addo claimed Ghana has consistently voted for resolutions at the U.N. General Assembly, condemning Russia’s aggression against Ukraine, emphasizing that it is unacceptable for a major power to disregard the sovereignty of a smaller nation. He also expressed readiness to improve Ghana’s fiscal health with the African country struggling to meet its debt obligations.
Kishida’s first trip to Africa since taking office in October 2021, comes as he tries to boost ties with the “Global South” — a term that collectively refers to developing nations in areas including Asia, Africa and Latin America — ahead of the G-7 summit.
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