Ghana Awaits $1.2bn Boost to Stabilize Cedi and Fuel Growth

Finance Minister Dr. Mohammed Amin Adam disclosed Ghana’s expectation to receive a substantial financial boost of approximately $1.2 billion from its development partners. This anticipated influx from the International Monetary Fund (IMF), the World Bank, and the African Development Bank is targeted to further stabilize the Ghanaian cedi by the end of 2024. Dr. Amin Adam highlighted that this financial reinforcement is not only aimed at currency stabilization but also intended to support growth interventions within the nation.

During the Ministry’s first monthly press briefing, the Finance Minister also emphasized the critical need for parliamentary approval of a $150 million World Bank facility designated for the Greater Accra Resilient and Integrated Development (GARID) project. This project is vital for enhancing flood protection measures at the community level, addressing one of the pressing environmental challenges facing the nation.

The urgency of this financial assistance comes at a time when the Ghanaian cedi faces significant depreciation, having lost about 6.8% of its value against the dollar. The Bank of Ghana attributes this recent pressure on the cedi to various factors, including additional payments for energy and corporate sectors. The situation has been further exacerbated by delays in the disbursement of the second tranche of the cocoa loan and a World Bank loan. However, the central bank notes that the impact of these pressures has been somewhat mitigated by continuous inflows from remittances, mining companies, and the domestic gold purchase programme.

On a brighter note, Ghana has been witnessing positive strides in its external sector. The country recorded a current account surplus of $0.46 billion at the end of 2023, a significant improvement from a deficit of $1.52 billion at the end of December 2022. Similarly, the trade balance for 2023 ended with a surplus of $2.6 billion, albeit slightly lower than the $2.9 billion surplus recorded at the end of 2022. This trend of surpluses has continued into 2024, with a trade surplus of $392 million reported at the end of February 2024.

Ghana’s Gross International Reserves (GIR), including encumbered assets and petroleum funds, stood at $5.9 billion, equivalent to 2.7 months of import cover, at the end of December 2023. This figure represents a slight decrease from $6.3 billion at the end of December 2022. Nonetheless, the GIR has been bolstered by the Bank of Ghana’s Gold-for-Reserve Programme and the government’s Gold-for-Oil Programme, along with external inflows from the IMF, World Bank, and the Cocoa Syndicated Funds.

To date, the IMF has disbursed $1.2 billion since May 2023, and the World Bank has released $300 million following the parliamentary approval of the World Bank Development Policy Operation (DPO). These financial inflows are critical for Ghana as it seeks to navigate through its current economic challenges and secure a more stable and prosperous future for its citizens. The government’s proactive measures and international cooperation signal a committed effort to restore confidence in the Ghanaian economy and ensure sustainable growth.