The first tranche of the $3 billion International Monetary Fund (IMF) support will be released immediately after the Executive Board of the fund approves the country’s programme on Wednesday, May 17, 2023, the Minister of State at the Ministry of Finance, Dr Mohammed Amin Adams, has told the Daily Graphic.
He said the first tranche of $600 million will be used for budget support and also serve as balance of payment support for the country.
The second tranche of another $600 million is expected to hit the accounts of the Bank of Ghana in November when the country completes the first phase of the programme.
The rest will be released in five tranches of $360 million each after each of the semi-annual reviews are successfully concluded.
Ghana’s economy has been faced with a myriad of challenges ranging from high inflation, which hit a 22-year high of 54.1 per cent in December 2022, and an unsustainable public debt of GH¢575.7 billion.
This prompted the country to seek help from the IMF in July last year, and although the government was able to reach a staff-level agreement with the fund in December last year, a board-level approval, which will pave the way for the disbursement of the $3 billion support, is hinged on the country’s ability to restructure both its domestic and external debts.
Although the domestic debt exchange programme has been concluded and described as a success by the Ministry of Finance, the restructuring of the external debt had held back the deal.
Last Friday, the country received good news as the Creditor Committee, co-chaired by China and France, granted the country with the financial assurances, paving the way for the Executive Board of the IMF to now approve Ghana’s programme.
Dr Amin Adams said the Executive Board of the Fund was expected to sit on Ghana’s programme on Wednesday, May 17, 2023, with approval expected soon after the sitting.
He said the country had satisfied all the requirements of the fund, and was, therefore, confident of getting a programme by Wednesday.
“We undertook a number of steps towards the expected approval of the programme, and have already satisfied all the five prior actions required by the fund,” he stated.
He said the prior actions included the publication of the COVID-19 audit report; implementation of electricity tariff adjustment; signing of a memorandum of understanding between the Ministry of Finance (MoF) and the Bank of Ghana to eliminate monetary financing of the central bank; and the enactment of the necessary legislations to boost revenue.
“We also completed the Domestic Debt Exchange Programme (DDEP), with exchange of Cocoa Bills and dollar denominated bonds currently at an advanced stage,” he stated.
He said the government had also commenced negotiations with its commercial creditors on debt treatment and also formally submitted the memorandum of economic and financial policy to the IMF.
“Based on all these, we are fully positioned to receive board level approval of our programme,” he said.
The Minister of State said the IMF programme would help to restore macro-economic stability, ensure debt sustainability and support structural reforms.
He said the programme would be supported by prudent macro-economic policies with strong structural reforms to address the bottlenecks, especially in public finance management.
“It will also promote social protection programmes to protect the poor, and return public debt to sustainable levels by 2028,” he stated.
Dr Amin Adams also noted that the programme would help to unlock the much needed financing from development partners, adding that Ghana had already started negotiations for a three-year development policy budget support programme with the World Bank.
He said when concluded, $300 million would be disbursed to the country each year.
“This will complement what the IMF is giving us,” he stated.
Dr Amin Adams said the government had been able to secure a deal within a relatively short period of time due to a high level political commitment complemented by support from the IMF and bilateral partners.
“We are seeking to restructure a potential $5.4 billion with the Creditor Committee, and we are hopeful that the negotiation will commence soon,” he said.
He said the government was also seeking to restructure a $14 billion debt with commercial creditors, adding that the government had already started negotiations in that regard.
“Over $13 billion of this $14 billion debt are in bonds, and a committee has been established to start negotiations.
We are confident that the approval from the IMF in the coming days will send some good signal to the market and stakeholders,” he added.
The first tranche of the $3 billion IMF support is expected to be released immediately after the Executive Board of the fund approves the country’s programme on Wednesday, the Minister of State at the Ministry of Finance, Dr Mohammed Amin Adams, has said.