Ghana, a major producer of gold, oil, and cocoa, has received a $600 million payout from the International Monetary Fund (IMF) as part of its $3 billion loan program to support its economic recovery from the shocks of the past years.
The IMF’s board approved the first review of Ghana’s loan program on Friday, allowing for the immediate disbursement of the funds, the Fund said in a statement.
The decision came after Ghana reached a deal to restructure $5.4 billion of loans with its official creditors, including China and France, a key step to unlocking the second tranche of IMF funding.
The IMF praised Ghana’s performance under the program, saying it had helped to improve growth, reduce inflation, and increase international reserves.
The Fund also said the authorities’ reforms were bearing fruit and signs of economic stabilization were emerging.
“The authorities’ reform efforts have helped to improve growth, decrease inflation, and increase international reserves,” the IMF said.
The Fund projected that the economy would grow 2.3% in 2023 and 2.8% in 2024, after contracting by 0.9% in 2022 due to the impact of the global pandemic and the collapse of oil prices.
Ghana turned to the IMF for financial support in 2022 as it faced its worst economic crisis in a generation, which came amid spiraling public debt-servicing costs and a loss of market access.
The IMF loan program aims to restore macroeconomic stability and debt sustainability, address long-standing vulnerabilities, and lay the foundations for stronger and more inclusive growth.
The program also has a strong focus on preserving financial stability and encouraging private investment and growth.
The IMF said securing timely debt restructuring agreements with external creditors, especially private bondholders, would be essential for the successful implementation of the program.
Ghana is aiming to restructure two-thirds of its external debt which was about $30 billion at the end of 2022.
The Finance Minister, Ken Ofori-Atta, said official engagement with the bondholders would start as early as next week and an agreement could be reached by mid-March.
He also said the World Bank was scheduled to meet on Jan. 23 to approve $550 million in additional funding for Ghana, which would include $300 million in budget support and $250 million for a fund to support financial sector stability.
Ghana is not the only African country that has sought IMF assistance in recent years. According to the IMF, 21 sub-Saharan African countries have received a total of $16.1 billion in emergency financing from the Fund since the start of the pandemic.
The IMF has also called for more international support for the continent, which faces a financing gap of $290 billion by 2023.
The Fund’s Managing Director, Kristalina Georgieva, said last week that Africa needed a “new, more powerful wave of debt relief” and urged creditors to do more to help.
She also said the IMF was working on a new allocation of Special Drawing Rights (SDRs), a form of international reserve asset, to boost the liquidity of low-income countries.
Ghana’s President, Nana Akufo-Addo, who won a second term in December, has vowed to pursue an agenda of economic transformation and social development in his next four years. He has also pledged to continue the fight against corruption, improve governance, and enhance the business environment.
Source: Reuters
