Ghana has secured a $1.15 billion funding package from the International Monetary Fund (IMF) and the World Bank to support its economic recovery from the effects of the global crisis. The funding is expected to be disbursed by the end of February, according to the Minister of Finance, Ken Ofori-Atta.
The minister said he was confident that official creditors would agree on a memorandum of understanding in a meeting scheduled for Jan. 8, Bloomberg reported. The agreement would pave the way for the IMF executive board to meet and review Ghana’s performance under its PC-PEG program, which started in May 2020 with the approval of the first tranche of $600 million.
The country is currently awaiting the second tranche of the $3 billion bailout, which the minister said would likely be approved by the board on January 18. He added that the board approval would also trigger the process for two World Bank disbursements totaling $550 million. The Bank has committed $300 million in budgetary support and another $250 million toward Ghana’s Financial Stability Fund, so “we are in good shape,” the minister said.
The funding from the IMF and the World Bank is part of the international efforts to help developing countries cope with the economic fallout of the pandemic, which has hit hard on sectors such as tourism, trade, and remittances. Ghana is among the countries that have benefited from the Debt Service Suspension Initiative (DSSI), which allows eligible countries to defer payments to bilateral creditors until June 2021.
Ghana’s economy, which was one of the fastest-growing in Africa before the crisis, contracted by 3.2% in the second quarter of 2020, the first time in almost four decades. The government expects a modest growth of 0.9% for the whole year, down from 6.5% in 2019. The fiscal deficit is also projected to widen to 11.4% of GDP, while the public debt is estimated to reach 76.7% of GDP by the end of 2020.
Despite these challenges, the minister said the government was committed to implementing prudent fiscal and monetary policies to restore macroeconomic stability and foster inclusive growth. He said the government had launched several initiatives to support businesses and households, such as the Coronavirus Alleviation Programme, the Ghana CARES program, and the Ghana Enterprises Agency.
The minister also expressed optimism that the country’s economic prospects would improve in 2021, as the global recovery gains momentum and the domestic production and consumption resume. He said the government was expecting a rebound in growth to 5.7% in 2021, driven by the recovery of the services sector, the expansion of the industrial sector, and the continued growth of the agricultural sector.
The minister’s positive outlook was echoed by some analysts and observers, who praised Ghana’s resilience and potential in the face of the crisis. For instance, the World Bank’s Country Director for Ghana, Pierre Laporte, said in a statement that “Ghana has a great opportunity to raise its economic growth and create more jobs for its youth if it can consolidate its macroeconomic stability and implement the structural reforms needed to enhance its competitiveness.”
Source: GhanaWeb
