In a significant development for Ghana’s economic recovery, the International Monetary Fund (IMF) and the Ghanaian government have successfully reached a staff-level agreement on the first review of a $3 billion loan program. This achievement paves the way for a disbursement of $600 million, pending approval by the IMF’s executive board.
Ghana, grappling with its most severe economic crisis in a generation, sought financial support from the IMF last year, primarily due to mounting public debt. The three-year extended credit facility, which includes conditions such as domestic and external debt restructuring, spending cuts, and fiscal adjustments, had previously granted Ghana an initial $600 million tranche in May.
The IMF acknowledged that Ghana’s economic growth had exhibited greater resilience than initially anticipated, with inflation decreasing, exchange rates stabilizing, and improved fiscal and external positions. The nation is making progress toward reducing the fiscal primary deficit by approximately 4 percentage points of GDP in 2023 while maintaining spending within program limits.
To address its debt challenges, Ghana is currently engaged in negotiations with bilateral and commercial international creditors. The country aims to reduce interest payments on its external debt by approximately $10.5 billion over the next three years. As of the end of 2022, a significant portion of Ghana’s external debt, including debts to countries like China and members of the Paris Club of creditor nations, was slated for restructuring, with a total external debt stock of approximately $30 billion.
The news of the agreement has had a notable impact on Ghana’s international dollar bonds, which saw an increase of up to 0.9 cents on the dollar on Friday. These bonds had been gradually rising since March on the hopes of a successful debt restructuring deal, although they experienced a minor setback earlier this week due to a global debt market selloff.
