The International Monetary Fund (IMF) has assured Ghanaians that it will help the country restore its macroeconomic stability, increase growth, and bring relief to the people.
A statement released by the Fund’s mission chief for Ghana, Stéphane Roudet, before the team visited Accra stated, “the IMF remains fully committed to helping Ghana restore macroeconomic stability, bring relief to Ghanaians in this time of crisis, and lay the foundation for more inclusive growth.”
An IMF team is expected to be in Ghana from December 1 to 13, 2022, to continue discussions with Ghanaian economic managers about the country’s post-COVID economic growth programme as well as policies and reforms that could be supported by a new IMF loan.
Stéphane Roudet noted that his team has had productive discussions with Ghanaian authorities over the last few months and looks forward to continuing engagement in Accra.
Despite an increasingly challenging external environment, Ghana’s fiscal and debt vulnerabilities worsened fast, according to the IMF website.
Ghana’s public debt increased significantly during the COVID-19 pandemic, and investors were weary as the government’s efforts to maintain debt sustainability seemed inadequate.
As this led to a downgrade in Ghana’s credit rating, the withdrawal of non-resident investors from the domestic bond market and eventually Ghana’s inability to access international capital markets became a reality.
As a result of these adverse developments, further aggravated by price and supply-chain shocks from the war in Ukraine, the exchange rate depreciated additionally, inflation increased to 40.4 percent in October, putting foreign exchange reserves under pressure.
This then compelled the government to request assistance from the IMF.
On September 26, 2022, the Ministry of Finance and the Bank of Ghana commenced discussions with the IMF for an IMF-supported programme. A key prerequisite for a programme is confirmation that Ghana’s debt is on a sustainable path; this will require a comprehensive Debt Sustainability Analysis (DSA), which is currently ongoing.
An IMF-supported programme would assist Ghana in restoring macroeconomic stability and ensuring debt sustainability, while protecting its most vulnerable citizens.
It would help develop the conditions for inclusive and sustainable growth and also create jobs for Ghanaians.
The programme also aims at strengthening policy credibility, reducing exchange rate pressures, and providing additional sources of financing.
“The Fund’s various lending instruments are tailored to different types of balance of payments needs and the specific circumstances of a member country,” the information noted.
According to the statement, the previous arrangement with Ghana was a three-year Extended Credit Facility (ECF) from 2015-2018, which was extended to April 2019.
The Fund has stopped short of commenting on the final form the latest financing programme will take, since negotiations are ongoing.
“The IMF Executive Board will decide the level of access (credit amount) and the final programme design,” the fund said.
The Fund also noted that “Specifically, in the fiscal sector, an important policy objective would be to increase revenue, critical for debt sustainability, while safeguarding spending on health, education, and social protections.”
Meanwhile, the Fund is discussing with Ghanaian authorities the type of IMF facility that best fits the financial needs of Ghana.
Source: The Independent Ghana