Ghana, external creditors close to MoU, $600m IMF money also coming-Ofori-Atta

Ghana hopes to secure a Memorandum of Understanding (MoU) with its external creditors by November. 

That will increase stakeholder and investor confidence in the Ghanaian economy, thereby, help accelerate efforts of ensuring macroeconomic stability, debt sustainability, and inclusive growth. 

The MoU would spell out specific debt treatment that external creditors would agree on with Ghana as part of the implementation of government’s ongoing 17th International Monetary Fund (IMF) loan-support programme. 

Finance Minister Mr Ken Ofori-Atta, expressed the confidence as Ghana reaches a Staff-Level Agreement with IMF for the first review of its $3 billion Extended Credit Facility (ECF).

The agreement paves the way for Ghana to receive the second tranche of $600 million from the IMF after an Executive Board approval.

The loan-support programme is to ensure Ghana’s macroeconomic stability, debt sustainability and chart a path for inclusive growth, while protecting the vulnerable. 

Speaking at a joint press conference at the end of the IMF Staff Mission in Accra, Mr Ofori-Atta said the government would use the IMF/World Bank Group (WBG) Annual Meetings in Marrakech next week to firm up agreements. 

The first review of Ghana’s IMF-loan support programme, saw the Mission hold meetings with Dr Mahamudu Bawumia, Vice President, Mr Ken Ofori-Atta, Finance Minister and Dr Ernerst Addisson, Governor, Bank of Ghana (BoG). 

Representatives from various government agencies as well as other stakeholders were engaged during the two-weeks review. 

“We’re optimistic that our bilateral creditors will deliver the MoU in time in November for our Board as we continue our engagement, which have continued to be positive.” 

“We’re also making progress with our engagement with the Eurobond holders and official lenders, and we hope to pursue this in our trip to Marrakech (Morocco) for the IMF/WBG annual meetings,” he added. 

He explained that the implementation of the IMF-supported Post-COVID-19 Programme of Economic Growth (PC-PEG) had led to strong signs of macroeconomic recovery and stability.  

“Gross Domestic Product (GDP) growth has rebounded strongly, averaging 3.2% in the first two quarters of 2023, compared with the same period in 2022, mainly on the back of growth in Services and Agriculture,” he said. 

“The latest price development in August 2023 also indicates a fall in headline inflation after a consecutive upward trend since May 2023, but it’s dropped to 40.1%,” the Finance Minister noted. 

He also said the Cedi had remained relatively stable from the beginning of the year, having depreciated by 23.5% cumulatively, with primary balance on commitment basis having a surplus of $2.2 billion as of first half of 2023. 

On his part, Mr Stephane Roudet, IMF Mission Chief for Ghana, stated that “Ghana will have access to about $600 million in financing once the review is approved by IMF Management and formally completed by the IMF Executive Board.” 

He added that: “Upon completion of the Executive Board review, Ghana would have access to SDR 451.3 million (about $600m), bringing the total IMF financial support to SDR 902.8m (about $1.2 billion).” 

He said this at the end of the first review for Ghana’s $3 billion loan-support programme in Accra. 

He, however, noted that: “An agreement with official creditors on a debt treatment in line with official creditors with programme parameters would provide the needed financing assurances.” 

The Chief Mission indicated that the country’s fiscal performance with respect to the objectives of the IMF-loan support programme had been strong as primary deficit on commitment basis was four per cent of Gross Domestic Product (GDP).  

Also, macroeconomic policies had been adjusted by Ghanaian authorities, while domestic debt restructuring had been “successfully” completed, while wide-ranging reforms had been launched amid acute economic and financial crisis. 

“These actions are already generating positive results, as growth in 2023 has proven more resilient than initially envisaged, inflation has declined, the fiscal and external positions have improved, and exchange rate has stabilised,” Mr Roudet said. 

The Chief Mission called on Ghana’s external creditors to move forward and agree on an appropriate debt treatment in line with the financing assurances they provided in May 2023.