Ghana’s Bid to Renegotiate $3bn IMF Programme Fails

Ghana’s Bid to Renegotiate $3bn IMF Programme Fails

Ghana’s attempt to renegotiate the terms of its $3 billion Extended Credit Facility (ECF) with the International Monetary Fund (IMF) has failed, according to UK-based research firm Fitch Solutions.

Despite the setback, the government is unlikely to withdraw from the IMF arrangement, given the country’s dependence on external financial support to stabilise its economy.

“We think it is highly unlikely that the authorities will pull out of the programme following unsuccessful renegotiation attempts, given Ghana’s reliance on IMF assistance for external stability,” Fitch Solutions stated.

The research firm expects the government to stay the course on fiscal consolidation, in line with the programme’s objectives. It further highlighted that continued IMF support remains critical for Ghana’s foreign exchange liquidity and is a key factor underpinning investor confidence in the country’s economic management.

President John Mahama, in an interview with Bloomberg last month, reaffirmed that his administration has no immediate plans to extend Ghana’s ongoing ECF programme.

“We’ve not talked about an extension of the programme. We are determined to continue with this programme,” President Mahama said. “If it’s necessary to look at additional funds or to extend the programme, we’ll look at it, but for now, we are determined to continue on this trajectory.”

Ghana’s $3 billion ECF programme, approved on May 17, 2023, spans three years and is designed to support the country’s economic recovery and growth. As part of the agreement, Ghana is required to implement structural reforms and maintain fiscal discipline to restore economic stability.

Under the agreement, Ghana is required to achieve a primary surplus of 1.5% of GDP by the end of 2025, limiting the government’s ability to boost public investment.

With the government committed to adhering to the programme’s terms, investors will be closely watching how authorities navigate ongoing economic challenges within the framework of the existing agreement.