Ghana set to receive $1.15bn from IMF

Ghana is anticipating a financial boost of $1.15 billion from the International Monetary Fund (IMF) and the World Bank by the end of February, as bilateral creditors move closer to finalising terms for a debt restructuring agreement. Finance Minister Ken Ofori-Atta conveyed optimism about official creditors reaching a memorandum of understanding during a scheduled meeting on January 8, as reported in a conversation with Bloomberg on Friday.

Upon reaching an agreement, the IMF executive board would evaluate Ghana’s performance under a program initiated in May, potentially approving a $600 million disbursement. This constitutes the second tranche of a $3 billion bailout, with Ofori-Atta indicating that the board is likely to convene on January 18 despite some delays.

Approval by the board would also set in motion the release of two World Bank disbursements totalling $550 million, according to Ofori-Atta. The World Bank has committed $300 million for budgetary support and an additional $250 million for Ghana’s Financial Stability Fund. Ofori-Atta expressed confidence in the process, stating that “We are in good shape.”

The disbursement for budgetary support is expected by the end of this month, while the contribution to the fund providing liquidity to financial institutions impacted by domestic debt restructuring is likely to occur by the end of February.

Ghana has been grappling with one of its most severe economic crises in a generation, marked by inflation exceeding 50% at one point, which has since decreased to 26.4% as of November 2023. Additionally, the Cedi lost over 11% of its value in the first half of 2023.

In December 2022, Ghana suspended payment on the majority of its $28.4 billion external debt, effectively defaulting. However, a $3 billion deal with the IMF was reached. In October, reports emerged that Ghana’s Central Bank incurred losses of around $5 billion in one year, sparking protests in the capital, Accra, with demonstrators calling for the resignation of Governor Ernest Addison.