The Bank of Ghana has recently received a significant financial boost with the arrival of the first $300 million tranche of a World Bank fund, according to sources familiar with the deal, as reported by the Daily Graphic. This injection is part of a larger $900 million development policy budget support programme extended to Ghana by the World Bank, aimed at bolstering the country’s economic stability over a three-year period.
This financial support comes at a crucial time for Ghana, whose currency, the Cedi, has seen a depreciation of 6.8 percent since the beginning of the year. The World Bank’s assistance is poised to enhance Ghana’s foreign international reserves, providing a much-needed cushion for the Cedi amidst its depreciating value. The funding arrangement entails Ghana receiving an annual sum of $300 million over three years, dedicated to budget support, marking a significant commitment to the country’s fiscal health and economic recovery.
In a statement released in January 2024, the World Bank outlined the objectives of the first Resilient Recovery Development Policy Financing for Ghana. This initiative is designed to aid in the nation’s economic revival by promoting resilient and inclusive growth. The funding aims to address several critical areas, including restoring fiscal sustainability, bolstering financial sector stability, fostering private sector development, improving the financial discipline of the energy sector, and enhancing social and climate resilience.
The reforms supported by this financial aid series are comprehensive and multifaceted. They include efforts to strengthen domestic revenue mobilization, control expenditures, ensure financial sector stability, eliminate private investment barriers, place the energy sector on a firmer financial and operational foundation, fortify the country’s social protection systems, and integrate climate adaptation and mitigation strategies into policy making.
The approval of this financial aid package was preceded by a consensus in principle under the G20 Common Framework by the Official Creditors’ Committee regarding the primary parameters of the proposed debt restructuring for Ghana. This agreement aligns with the Joint World Bank-International Monetary Fund Debt Sustainability Framework, signifying a pivotal step toward restoring the nation’s debt sustainability.
The World Bank’s International Development Association (IDA), established in 1960, is instrumental in assisting the world’s poorest countries. Through grants and low-to zero-interest loans, IDA supports projects and programs that catalyze economic growth, alleviate poverty, and enhance the livelihoods of the poor. As one of the foremost sources of assistance for the globe’s 74 most impoverished countries, 39 of which are in Africa, IDA’s contributions have been transformative. The impact of IDA’s involvement extends to approximately 1.3 billion people living in these countries, underscoring its pivotal role in global development efforts.
Since its inception, IDA has disbursed $458 billion to 114 countries, with annual commitments averaging about $29 billion over the recent three fiscal years. The majority of these resources, approximately 70 percent, are directed towards African nations, demonstrating IDA’s significant investment in the continent’s future. This latest financial support to Ghana underscores the World Bank and IDA’s ongoing commitment to fostering sustainable economic development and poverty reduction in the world’s most vulnerable regions.
Source: Graphic Online
