The International Monetary Fund (IMF) Executive Board has approved Ghana’s request for a $3 billion bailout to help the country’s ailing economy.
The choice was agreed upon on Wednesday during a meeting of the Executive Board, after Ghana had received finance guarantees from the Paris Club.
International media behemoths Reuters and Bloomberg stated that many sources with direct knowledge of the situation verified the approval of the three-year extended loan facility for Ghana.
On May 18, the International Monetary Fund will conduct a televised news conference to provide additional information at the conclusion of the IMF Executive Board meeting regarding Ghana’s bailout request.
IMF Managing Director Kristalina Georgieva stated last Friday that the IMF Executive Board was considering approving the loan because Ghana’s formal creditors had given the requisite funding assurances.
“A deal is anticipated on Wednesday. Following clearance, there would be a distribution of $600 million as a first tranche, according to Mohammed Amin Adam, minister of state for finance.
In November or December, he said, a second $600 million tranche is anticipated to be granted following a positive first evaluation of the program, with the remaining $360 million being distributed in equal installments following semi-annual reviews.
According to him, the money will assist Ghana reach its goal of having enough foreign reserves to cover three months’ worth of imports by 2026.
The IMF and the Ghanaian government agreed at the staff level on a new arrangement under the Extended Credit Facility on December 12, 2022.
Ghana’s increasing debt crisis compelled the government to seek IMF assistance.
The government had previously stated that it had asked the IMF for financial aid because of a number of issues, including Ghana’s dire debt situation, the CoVid-19 pandemic, the negative effects of the Russia-Ukraine war, the cleaning up of the banking sector, and the excess capacity payments in the energy sector.
Vice President Dr. Mahamudu Bawumia acknowledged that the government had few options for generating sufficient revenue in the face of the worsening economic challenges when he spoke at the launch of two new high-level information technology programs at Accra Business School at Baatson in Accra in July 2022. This ultimately led to the decision to seek assistance from the IMF.
“Ghana’s fiscal and debt resilience has become worse in the middle of this global crisis. Some analysts have claimed that the huge increase in the budget deficit of the debt stock cannot be attributed to government spending on its own. In actuality, they are correct.
“Expenditures for COVID-19 alone were not the cause of the rise in Ghana’s debt stock by the end of 2021. In fact, as I mentioned in my lecture on April 7th, “the Banking Sector Clean-up (GH25 billion) and the Energy Sector Excess Capacity payments (GH7 billion) were two major expenditure items that were necessary to comprehend the evolution of the fiscal deficit and the debt stock.
Akufo-Addo: IMF agreement will foster economic growth
In addition, President Nana Addo Dankwa Akufo-Addo expressed confidence in Ghana’s cooperation with the IMF, highlighting the latter’s contribution to economic stability and progress.
At the Abu Dhabi Sustainability Week in Dubai, Nana Akufo-Addo maintained his confidence in Ghana’s future.
Our goal for the economy this year is a 5.6 percent GDP growth rate, therefore we are aiming to expand the economy at a much higher rate. In our instance, we consider our engagement with the IMF as a way to improve the likelihood of mutually beneficial outcomes for the private sector and the nation by repairing our public finances over the near term and restoring credibility to our balance of payments, which has recently suffered significantly.
Ghanaian politics will continue to emphasize public accountability. We have a strong parliament that is not hesitant to ask pertinent questions, so we want to be as transparent as possible, and that is the pledge that the president [Akufo-Addo] has made,” the Minister of State stated.
