Parliament has reviewed a $360 million financing agreement between the Government of Ghana and the International Development Association (IDA) of the World Bank Group to support the implementation of the Second Resilient Recovery Development Policy Operation (DP02).
The agreement, presented by the Ministry of Finance and tabled before the Finance Committee forms part of a broader $1.6 billion budgetary support initiative designed to anchor Ghana’s recovery and growth agenda following recent economic shocks.
The initiative is the second in a three-part Development Policy Operation series that began in 2023, “following the devastating 2022 economic crisis marked by record inflation, rapid currency depreciation, and a crippling public debt burden.”
According to the Ministry of Finance, The World Bank’s facility complements Ghana’s engagement with the International Monetary Fund (IMF) to restore macroeconomic stability, ensure debt sustainability, and strengthen social protection.
The DP02 agreement is positioned within a larger framework of recovery policies adopted by the government.
“These include fiscal reforms, energy sector stabilization, domestic revenue mobilization, and improvements in financial sector governance. The first tranche under the DPO series – $300 million – was released on March 27, 2024, after Ghana implemented preliminary reform actions”
Finance Committee of Parliament
The report indicated that in 2024, GDP growth accelerated to 5.7 percent from 3.1 percent the previous year. However, macroeconomic vulnerabilities persisted. Inflation rose to 23.8 percent in December 2024 – slightly above the previous year – and the cedi depreciated by 19.2 percent.
“The primary fiscal balance worsened from a 0.2 percent deficit in 2023 to 3.9 percent in 2024, falling short of the target surplus of 0.5 percent. Despite these setbacks, early 2025 data indicates notable recovery, with GDP growing at 5.3 percent in the first quarter and inflation dropping to 18.4 percent by April”
Finance Committee of Parliament
Observations and Terms of the Facility
During deliberations, the Finance Committee, chaired by Hon. Isaac Adongo, emphasized the importance of the facility in supporting the 2025 Budget.
The agreement entails a $360 million credit at an annual all-in cost of 2.05 percent. It includes a 12-year repayment period with a 6-year grace period. The credit will not fund any specific project but will serve as general budget support, with primary allocations directed toward arrears owed to contractors.
The Committee confirmed that the facility is crucial for financing reforms in domestic revenue generation, energy sector sustainability, social protection, and climate resilience. It is also expected to boost foreign direct investment and improve financial discipline within state-owned enterprises.
“The entire DP02 sum will go towards reducing outstanding obligations to contractors,” the Finance Committee noted, referencing the GHS 13 billion earmarked in the 2025 Budget for settling arrears. This move is expected to provide fiscal relief and inject liquidity into the real economy.
Ghana’s economic turnaround in 2025 has been supported by policy consistency and structural reforms. Gross International Reserves as of April 2025 reached $10.7 billion, up from $6.6 billion a year earlier.
The cedi, once under severe strain, has appreciated 44.7 percent against major currencies by mid-June, reflecting growing investor confidence and improved foreign exchange inflows.
The Government’s ongoing Resetting Agenda emphasizes governance reform and inclusive development. DP02 is aligned with this vision and will enable the Mahama-led administration to reinforce macroeconomic gains through targeted interventions.
The agreement outlines reform triggers in revenue collection, public expenditure control, financial sector oversight, and climate adaptation.
The Committee reaffirmed that the government has made significant progress in meeting the preconditions for accessing the total $900 million initially agreed upon. This includes meeting fiscal benchmarks, energy sector reforms, and steps taken to broaden the tax base.
A Broader Financing Strategy
The original DPO commitment was for $900 million. However, following renegotiations with the World Bank, the support package was expanded to $1.6 billion. DP02 was revised from $300 million to $360 million, while the upcoming DP03 tranche is projected to increase from $300 million to $400 million.
According to the Ministry of Finance, “these revisions reflect confidence in Ghana’s policy direction and offer the fiscal space needed to manage legacy obligations while fostering future growth.” The Committee stressed the importance of maintaining reform momentum to unlock the final tranche and ensure the long-term success of the economic recovery program.
After thorough examination, the Finance Committee recommended that Parliament adopt its report and approve the financing agreement in accordance with Article 181 of the 1992 Constitution. The Committee concluded that the $360 million facility will contribute to stabilizing the economy, curbing inflation, sustaining growth, and improving the lives of ordinary Ghanaians.
The Deputy Minister for Finance, Thomas Nyarko Ampem, who appeared before the Committee, emphasized that the funding will not only “alleviate current fiscal stress but also enhance policy credibility with development partners.”
Parliament’s endorsement of this facility marks another step in Ghana’s recovery roadmap as the government intensifies efforts to transition from stabilization to transformation under the 2025 Budget.
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