IMF, Ghana reaches staff level agreement for first assessment; awaits second $600m tranche
In a significant development for Ghana’s economic prospects, an International Monetary Fund (IMF) staff team, led by Mission Chief Stéphane Roudet, has successfully reached a staff-level agreement on the first review of Ghana’s Extended Credit Facility (ECF) arrangement. This landmark achievement follows intensive discussions held in Accra from September 25 to October 6, 2023, centered on the progress of vital reforms and the nation’s policy priorities within the context of its three-year program.
Announcing this pivotal agreement, Mr. Roudet highlighted its importance, emphasizing that its ultimate realization is contingent upon IMF management approval and Executive Board consideration, subject to receiving the necessary financing assurances. Notably, securing an accord with official creditors concerning debt treatment aligned with program parameters assumes paramount importance in this regard.
Upon the culmination of the Executive Board review, Ghana stands to gain access to an inflow of SDR 451.4 million, approximately equivalent to $600 million. This development augments the total IMF financial support disbursed to Ghana under the arrangement, a substantial sum of SDR 902.8 million, or approximately $1.2 billion, since May 2023.
Notwithstanding the acute economic and financial challenges confronting Ghana, the nation has demonstrated resilience and determination in implementing essential macroeconomic policy adjustments. The successful completion of a domestic debt restructuring operation and the initiation of a comprehensive range of reforms have already begun yielding positive outcomes. Notably, economic growth in 2023 has proven more robust than initially anticipated, accompanied by a decline in inflation, improved fiscal and external positions, and stabilization of the exchange rate.
Complementing these accomplishments, Ghana’s fiscal performance has exhibited strength, aligning with the commitments outlined in the Fund-supported program. The nation remains on track to reduce the fiscal primary deficit by approximately 4.0 percentage points of GDP in 2023, with spending well within the prescribed program limits.
Further underscoring Ghana’s commitment to its citizens, the government has significantly expanded social protection programs to provide a safety net for the vulnerable segments of society. Moreover, the nation has met its non-oil revenue mobilization target, indicative of its efforts to diversify revenue sources.
Ambitious structural fiscal reforms are driving domestic revenue enhancements, optimizing spending efficiency, bolstering public financial and debt management, and enhancing transparency, thereby fortifying Ghana’s economic foundation.
As Ghana showcases compelling progress under the IMF-supported program, the focus now pivots to securing an agreement with official creditors on debt treatment terms in alignment with IMF Executive Board-approved program parameters and debt targets. The IMF, in a resounding call to action, urges official creditors to expedite this process and arrive at a debt treatment agreement that aligns with the financing assurances extended in May 2023.
Ghana’s successful passage of the IMF’s first review marks a crucial step in the nation’s economic journey. While challenges persist, the government’s steadfast commitment to reforms and prudent economic management offers a glimmer of hope, underpinned by the prospect of substantial IMF financial support, pending the necessary formalities. Ghana’s path to economic stability and recovery is indeed a narrative worth tracking in the unfolding chapters of its economic evolution.
