Ghana and the International Monetary Fund (IMF) have achieved a significant milestone in their financial cooperation by reaching a staff-level agreement for the first review of Ghana’s $3 billion loan program. This development paves the way for the disbursement of $600 million pending approval by the IMF executive board.
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The IMF expressed its satisfaction with the Ghanaian authorities, stating that they have demonstrated strong commitment to economic policies and reforms, resulting in remarkable progress towards achieving the program’s targets and reform objectives.
Upon the final approval of the IMF board, Ghana will receive the second installment of its loan, bringing the total disbursed amount to $1.2 billion since May. However, the timely completion of this review depends on official creditors reaching an agreement on debt treatment consistent with the financing assurances provided in May 2023.
Ghana entered into an agreement with the IMF in December to address its severe economic crisis, with a focus on strengthening public finances and debt management. The country has successfully undertaken domestic debt restructuring, implemented macroeconomic policy adjustments, and initiated comprehensive reforms, which have already yielded positive outcomes such as improved growth, reduced inflation, fiscal and external stability, and exchange rate stabilization.
Finance Minister Ken Ofori-Atta emphasized that the $3 billion Extended Credit Facility with the IMF will play a pivotal role in restoring Ghana’s economic growth, achieving macroeconomic stability, and ensuring debt sustainability. This agreement was contingent on Ghana reducing its public debt to manageable levels and securing bondholders’ support. In December 2022, the government initiated a domestic exchange program to restructure the country’s debt portfolio, soliciting citizens’ involvement in the process.
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Ghana, renowned for its cocoa and gold production, as well as its oil and gas reserves, had faced mounting debt challenges in 2022, exacerbated by the impact of the COVID-19 pandemic and the Russia-Ukraine conflict, which affected the entire sub-Saharan African region.