Ghana’s Finance Minister, Mr Ken Ofori-Atta, has disclosed that the country is set to receive the second instalment of the International Monetary Fund (IMF) bailout funds in December.
During the 3rd GIPC-CEO breakfast meeting held in Accra, Mr Ofori-Atta revealed that Ghana is preparing for its first review with the IMF in November, as they await the disbursement of the second tranche amounting to $600 million.
Mr Ken Ofori-Atta also disclosed plans to collaborate with the World Bank to secure a Development Policy Operation (DPO) that would provide an additional $300 million, potentially leading to a total injection of around $1 billion to address the Bank of Ghana’s balance of payment challenges.
“We are ready for the mission that comes at the end of September so that we can try and get the staff level agreement while the mission is here, and then we go to the board in November for the release of the 2nd tranche, which will be $600 million.
“In addition to that, there are certain things we need to do with the World Bank so that we can get our DPO, which will be another $300 million. I believe that we are on course to maybe get a billion dollars to support Bank of Ghana’s balance of payment issues.”Mr Ken Ofori-Atta
This funding is intended to bolster Ghana’s balance of payments for the years 2023 and 2024. Meanwhile, as per the Bank of Ghana’s June 2023 Economic and Financial Stability Report, the country’s balance of payments registered a deficit of $107.8 million at the end of June 2023, roughly 0.1% of the GDP. This deficit marked a significant improvement compared to the same period in the previous year.
Concluding Discussions With The Paris Club And Bilateral Creditors
Mr Ofori-Atta expressed optimism about concluding discussions with the Paris Club and bilateral creditors by year-end 2023.
In May 2023, Ghana received the first tranche of $600 million of a $3-billion three-year extended credit facility from the IMF, aimed at revitalising the country’s economy.
In August 2023, the IMF emphasised the importance of the Bank of Ghana maintaining its policy mandates, despite financial setbacks experienced in the preceding fiscal year.
The IMF underscored the need for the central bank to take decisive actions to steer inflation back toward its target of 8 percent.
While acknowledging the Bank of Ghana’s GHS 60 billion loss due to the government’s Domestic Debt Exchange, the IMF deemed this impairment necessary to restore macroeconomic stability and public sustainability.
The Executive Board of the International Monetary Fund (IMF) approved a 36-month arrangement under the Extended Credit Facility (ECF) in an amount equivalent to SDR 2.242 billion (around US$3 billion, or 304 percent of quota). The program is based on the government’s Post COVID-19 Program for Economic Growth (PC-PEG), which aims to restore macroeconomic stability and debt sustainability and includes wide-ranging reforms to build resilience and lay the foundation for stronger and more inclusive growth.
Key policies under the authorities’ program include large and frontloaded fiscal consolidation to bring public finances back on a sustainable path, complemented by efforts to protect the vulnerable. According to the IMF, the adjustment effort will be supported by ambitious structural reforms in the areas of tax policy, revenue administration, and public financial management, as well as steps to address weaknesses in the energy and cocoa sectors.
Appropriately tight monetary and flexible exchange rate policies will help bring inflation back to single digits and rebuild international reserves. The program also has a strong focus on preserving financial stability and encouraging private investment and growth.