The International Monetary Fund (IMF) staff and the Ghanaian authorities have reached a staff-level agreement on economic policies and reforms support.
The bailout is by a new three-year arrangement under the Extended Credit Facility (ECF) of about US$3 billion.
The loan after of the staff level agreement has been approved and is expected to be ready by first quarter of 2023.
The authorities’ strong reform program is aimed at restoring macroeconomic stability and debt sustainability.
It will protect the vulnerable, preserve financial stability, and lay the foundation for strong and inclusive recovery.
In order to pillar the objective of restoring public debt sustainability, the authorities have initiated a comprehensive debt operation.
Thus, in addition to a front loaded fiscal consolidation and measures to reduce inflation and rebuild external buffers; the three years extension envisages wide range of reforms to tackle structural weaknesses and enhance resilience to shocks.
An International Monetary Fund (IMF) team led by Mr. Stéphane Roudet, Mission Chief for Ghana, landed in Accra on December 1 – 13, 2022, to discuss with the Ghanaian authorities IMF’s support for their policy and reform plans.
At the end of the mission, Stéphane Roudet said in a statement, “I am pleased to announce that the IMF team reached staff-level agreement with the Ghanaian authorities on a three-year program supported by an arrangement under the Extended Credit Facility (ECF); in the amount of SDR 2.242 billion or about US$3 billion.
“The economic program aims to restore macroeconomic stability and debt sustainability while laying the foundation for stronger and more inclusive growth.
“The staff-level agreement is subject to IMF Management and Executive Board approval and receipt of the necessary financing assurances by Ghana’s partners and creditors.
“ The Ghanaian authorities have committed to a wide-ranging economic reform program, which builds on the government’s Post-COVID-19 Program for Economic Growth (PC-PEG) and tackles the deep challenges facing the country.
He stated there are key reforms aimed at ensuring the sustainability of public finances and protection for the vulnerable.
He announced that the fiscal strategy relies on front loaded measures to increase domestic resource mobilization and streamline expenditure.
Roudet added, the duo authorities have pledged to strengthening social safety nets; reinforcing the existing targeted cash-transfer program for vulnerable households, improving the coverage and efficiency of social spending.
He explained the program encompasses developing a medium-term plan to generate additional revenue and advancing reforms to bolster tax compliance.
He emphasized it will help create space for growth-enhancement measures and social spending.
The statement further observed efforts will be made to strengthen public expenditure commitment controls, improve fiscal transparency, improve the management of public enterprises, and tackle structural challenges in the energy and cocoa sectors.
Mr Roudet said the authorities are committed to further transparent governance and accountability.
“To support the objective of restoring public debt sustainability, the authorities have announced a comprehensive debt restructuring.
Sufficient assurances and progress on this front will be needed before the proposed Fund-supported program can be presented to the IMF Executive Board for approval.
“Reducing inflation, enhancing resilience to external shocks, and improving market confidence are also important program priorities. Accordingly, the Bank of Ghana will continue to strengthen its monetary policy framework and promote exchange rate flexibility to rebuild external buffers.
“As part of the authorities’ debt strategy, a domestic debt exchange has been launched. The authorities are committed to taking the necessary mitigation measures to ensure financial sector stability is preserved.
“IMF staff held meetings with Vice President Bawumia, Finance Minister Ofori-Atta, and Bank of Ghana Governor Addison, and their teams, as well as representatives from various government agencies,” he reiterated.
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