The International Monetary Fund (IMF) has completed the 2023 Article IV consultation and the first review of Ghana’s 36-month extended credit facility arrangement, with the approval of the first review paving the way for immediate disbursement of SDR 451.4 million, about $600 million.
The IMF stated that Ghana’s performance under the programme has been strong noting that all quantitative performance criteria for the first review and almost all indicative targets and structural benchmarks were met.
“The authorities’ reforms are bearing fruit, and signs of economic stabilisation are emerging. Growth in 2023 has proven resilient, inflation has declined, and the fiscal and external positions have improved. Progress is also being made on debt restructuring, with the domestic debt exchange completed over the summer and an agreement recently reached on the restructuring of official bilateral debt,” IMF stated on Ghana’s economic reforms.
This was the first review of the $3 billion, 36-month Extended Credit Facility (ECF) Arrangement, which was approved by the board of IMF on May, 17, 2023, as well as the 2023 Article IV Consultation with Ghana.
The additional disbursement of SDR 451.4 million or $600 million brought Ghana’s total disbursements under the arrangement to about $1.2 billion.
According to IMF, Ghana is on track to lower the fiscal primary deficit on a commitment basis by about four percentage points of GDP in 2023.
“Spending has remained within programme limits. To help mitigate the impact of the crisis on the most vulnerable population, the authorities have significantly expanded social protection programmes. On the revenue side, Ghana has met its non-oil revenue mobilisation target.
“The Ghanaian authorities are also making good progress on their debt restructuring strategy. Their domestic debt restructuring was completed over the summer. On January 12, 2024, the authorities reached an agreement with the Official Creditor Committee (OCC) under the G20’s Common Framework on a debt treatment that is in line with Fund programme parameters. This agreement provided the financing assurances necessary for the Executive Board review to be completed.
“Ambitious structural fiscal reforms are bolstering domestic revenues, improving spending efficiency, strengthening public financial and debt management, preserving financial sector stability, enhancing governance and transparency, and helping create an environment more conducive to private sector investment.
“The authorities’ reform efforts are bearing fruit, and signs of economic stabilization are emerging. Growth in 2023 has proven resilient, inflation has declined, and the fiscal and external positions have improved.
“Looking ahead, fully and durably restoring macroeconomic stability and debt sustainability and fostering a sustainable increase in economic growth and poverty reduction will require steadfast policy and reform implementation,” IMF stated.
Managing Director and Acting Chair, International Monetary Fund (IMF), Mr. Bo Li, said fully and durably restoring macroeconomic stability and debt sustainability and fostering higher and more inclusive growth require steadfast policy and reform implementation.
Li said Ghana’s plans to further reduce deficits by mobilising additional domestic revenue and streamlining expenditure and to finalise its comprehensive debt restructuring are critical to underpin debt sustainability and ease financing constraints.
“Continued efforts to protect the vulnerable and to create space for higher social and development spending are also key. Reforms to improve tax administration, strengthen expenditure control and management of arrears, enhance fiscal rules and institutions, and improve SOEs management are needed to ensure lasting adjustment.
“The authorities took decisive steps to rein in inflation and rebuild foreign reserve buffers. Maintaining an appropriately tight monetary stance and enhancing exchange rate flexibility are key to achieving the program’s objectives.
“Bank of Ghana had deployed its regulatory and supervisory tools to mitigate the impact of the domestic debt restructuring on financial institutions. The authorities’ strategy aimed at maintaining a sound financial sector, drawing on new resources from the private sector, government, and multilaterals to rapidly rebuild financial buffers, is welcome. Ensuring full implementation of bank recapitalization plans and addressing legacy issues in the financial sector will be important.
“Reforms to create an environment more conducive to private investment are needed to enhance the economy’s potential and underpin sustainable job creation. Given Ghana’s exposure to climate shocks, promoting a green recovery by further advancing the adaptation and mitigation agendas should also remain a priority,” Li stated.
The Nation
