IMF assures of restored macroeconomic stability in Ghana

December 8, 2022 / Comments (0)

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The International Monetary Fund (IMF) has assured Ghanaians it will assist government to restore macroeconomic stability, spur growth and bring the much needed relief to them.

A statement issued by the Fund’s mission chief for Ghana, Stéphane Roudet prior to the visit of the staff team to Accra said, “the IMF remains fully committed to help Ghana restore macroeconomic stability, bring relief to Ghanaians in this time of crisis, and lay the foundation for more inclusive growth.”

The Fund said the team will visit Accra from today December 1 to 13 to continue discussions with managers of the Ghanaian economy on the country’s post-COVID programme for economic growth and associated policies and reforms that could be supported by a new IMF lending arrangement.

The IMF staff will also further engage with other stakeholders during the visit.
“Our objective for this visit is to make further progress toward reaching agreement on policies and reforms that could be supported by an IMF lending arrangement,” the statement said.

Mr Roudet recalled that his team had had productive discussions with Ghanaian authorities over the last few months and looked forward to further  engagement in Accra.

According to information about Ghana on the website of the IMF, Ghana’s fiscal and debt vulnerabilities worsened fast amid an increasingly challenging external environment.

During the COVID-19 pandemic, Ghana’s public debt increased significantly. At the same time, the government’s efforts to preserve debt sustainability were not seen as sufficient by investors, leading to credit rating downgrades, the exit of non-resident investors from the domestic bond market, and ultimately Ghana’s loss of access to international capital markets.

These adverse developments, further exacerbated by price and supply-chain shocks from the war in Ukraine, have led to a large exchange rate depreciation, a surge in inflation (40.4 percent year on year in October) and pressure on foreign exchange reserves. Against this backdrop, the government requested assistance from the IMF in early summer. Discussions between IMF staff and the Ghanaian authorities have been ongoing since then.

An IMF-supported programme would support Ghana in implementing policies that restore macroeconomic stability and ensure debt sustainability while protecting the most vulnerable parts of its population. It would help create the conditions for inclusive and sustainable growth and job creation. Such a programme would also help strengthen policy credibility, alleviate exchange rate pressures, and provide a catalytic effect on additional sources of financing.

The Fund maintains that it is discussing with Ghanaian authorities the type of IMF facility that best fits Ghana’s needs.

“The Fund’s various lending instruments are tailored to different types of balance of payments needs and the specific circumstances of a member country,” the information said.

The previous arrangement with Ghana was a three-year Extended Credit Facility (ECF) from 2015-2018, which was extended to April 2019.

The Fund has stopped short of commenting on the final form the latest financing programme will take, since negotiations are ongoing.

“The IMF Executive Board will decide the level of access (credit amount) and the final programme design,” the fund said.

The Bretton Woods Institution noted that the goal of Ghana’s economic programme, which would be supported by IMF financing, is to restore macroeconomic stability and ensure debt sustainability, support the credibility of government policies, restore confidence in the central bank’s ability to manage inflation and rebuild foreign exchange reserve buffers to make the economy more resilient to shocks.

“Specifically, in the fiscal sector, an important policy objective would be to increase revenues, critical for debt sustainability while safeguarding spending on health, education, and social protections” the Fund stated as part of responses to what the objectives of an IMF programme with Ghana will be.


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