Ghana Gets $300 Million Boost from World Bank to Revive Economy

Ghana has received a $300 million loan from the World Bank to support its economic recovery from the worst crisis in decades. The loan, approved on Tuesday, is the first in a series of three operations of $300 million each and part of a broad World Bank engagement for crisis response and resilience in Ghana, the World Bank said in a statement.

The loan comes after Ghana reached a deal to restructure $5.4 billion of loans with its official creditors, a milestone in its quest for debt relief. The agreement, which is consistent with the Joint World Bank-International Monetary Fund Debt Sustainability Framework, will help Ghana restore its debt sustainability and free up fiscal space for priority spending.

Ghana’s economy was hit hard by the war in Ukraine and the global pandemic, which disrupted its exports of oil, gold, and cocoa. The country also faced rising inflation, currency depreciation, and fiscal deficits. The government had to suspend payments on its external debts and restructure its domestic obligations.

The World Bank loan will support Ghana’s efforts to restore fiscal and debt sustainability, bolster growth prospects, curb inflation, and protect the most vulnerable. The loan will also help Ghana remove barriers to private investment, set the energy sector on a sounder financial and operational footing, strengthen the country’s social protection system, and mainstream climate adaptation and mitigation across policies.

The World Bank Vice President for Western and Central Africa, Ousmane Diagana, said that these steps were essential for Ghana to attract more foreign investment, revitalize its domestic private sector, build resilience against climate change, and improve the quality of life of its people.

The Ghanaian finance minister, Ken Ofori-Atta, said that the government was committed to restoring macroeconomic stability and implementing lasting reforms to set the economy on a path of strong long-term sustainable growth and transformation. He said that the loan would play a vital role in easing Ghana’s fiscal constraints and sustaining the momentum of economic recovery.

Ghana is not the only African country that has sought debt relief from its creditors amid the economic downturn. According to the World Bank, 28 African countries have requested to participate in the G20 Common Framework, a mechanism that allows for coordinated debt treatment among official bilateral creditors. The World Bank has also provided $25 billion in emergency financing to African countries since the start of the crisis.

The World Bank said that it would continue to work with Ghana and other African countries to address the challenges posed by the crisis and support their recovery and resilience. The World Bank also urged the international community to step up its support for Africa, especially in terms of vaccine access, debt relief, and climate finance.

The World Bank loan to Ghana is expected to boost the country’s economic growth, which is projected to rebound to 4.6% in 2024, after contracting by 1.1% in 2023. The loan will also help Ghana achieve its Sustainable Development Goals and its vision of becoming a middle-income country by 2030.

Source: Le Monde