The International Monetary Fund (IMF) has praised the country’s progress in implementing reforms in the cocoa and energy sectors under the Fund’s US$3 billion Extended Credit Facility program.
This commendation comes after the successful completion of the second review, which clears the path for an additional disbursement of US$360 million.
However, this is contingent upon the country reaching an agreement with its official bilateral creditors on an MoU consistent with the terms established in January 2024.
Following a 10-day staff visit to Accra, Stéphane Roudet, the IMF Mission Chief for Ghana, lauded the government’s endeavors to restore macroeconomic stability and ensure debt sustainability.
“I am pleased to announce that IMF staff and the Ghanaian authorities have reached a staff-level agreement on the second review of Ghana’s economic programme under the Extended Credit Facility arrangement,” Mr. Roudet said in a statement.
The agreement awaits approval from the IMF management and review by the executive board, pending receipt of financing assurances from Ghana’s official creditors.
The IMF Mission Chief highlighted the generally robust performance under the IMF-supported program, with most quantitative targets achieved and significant progress achieved in key structural reforms.
“The authorities’ policies and reforms to restore macroeconomic stability and debt sustainability while laying the foundations for stronger and more inclusive growth are already generating positive results,” he added.
Mr. Roudet discussed the challenges facing the nation’s cocoa and energy sectors, noting that the IMF team held thorough discussions with both the government and the Ghana Cocoa Board (COCOBOD).
“We understand that the government and COCOBOD are committed to ensuring that their activities, such as quasi-fiscal activities, are being curtailed and kept within an envelope that would ensure that their finances are sustainable,” Mr. Roudet reiterated.
Regarding the energy sector, Mr. Roudet recognized the substantial disparity between electricity sales revenue and the associated costs, highlighting that the program was structured to rectify this deficit.
“This has been done through implementation of tariff increases last year, significant tariff increases. And this is also being done through implementation of reforms that are really aimed at reducing commercial losses in the sector and reducing technical losses,” he explained.
The Minister of Finance, Dr. Mohammed Amin Adam, echoed Mr. Roudet’s comments, stating that the progress made is an indication of the government’s “shared determination and commitment to return the economy back to the path of macroeconomic stability and inclusive growth”.
Dr. Adam highlighted the successful achievement of the programme’s key performance indicators, including six quantitative performance criteria, three indicative targets and one structural benchmark due at the end of December 2023, as well as four structural benchmarks due at the end of March 2024.
However, the minister acknowledged that more attention is needed in the energy and cocoa sectors.
“For the energy sector in particular, we’ve discussed the possibility of ensuring that the shortfall in the sector is reduced,” he said, adding that the government will conduct a sector-wide audit, strengthen the implementation of the cash waterfall mechanism and review the tariff-setting methodology to reduce discretion and increase transparency.
Concerning the cocoa sector, Dr. Adam emphasized that the government will persist in prioritizing cost-cutting initiatives at COCOBOD and streamlining the cocoa road sector to allocate more resources towards finishing ongoing road projects.
The successful conclusion of the second review within the IMF program will trigger the release of the third installment amounting to US$360 million, contingent upon approval from the IMF executive board, anticipated in June 2024.
“The staff-level agreement on the second review we have secured marks a significant milestone towards unlocking the disbursement of the third tranche of 360 million dollars under the program,” Dr. Adam said.