Ghana and the International Monetary Fund (IMF) have reached a prelimary agreement for the fund to support the economy with a US$3 billion credit to help resuscitate it and correct fiscal and monetary imbalances.
The proposed three-year extended credit facility (ECF) was approved by the staff of the IMF this week, subject to final approval by the management and Executive Board of the Bretton Woods institution.
A statement from the IMF said the Management and Executive Board approval was conditioned on the completion of a debt restruturing exercise to bring debt stock to sustainable levels.
It is Ghana’s 18th support from the Bretton Woods institution after joining it in 1957.
In the statement issued by the IMF Mission Chief to Ghana, the fund said the prelimary aprpoval would be presented to the IMF Board for final approval after the country has made sufficient progress with efforts to restore debt sustainability.
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 programme can be presented to the IMF Executive Board for approval,” the statement said.
Ghana’s debt was assessed to be unsustainable, prompting efforts to restructure the stock to help qualify for the fund support.
A domestic debt exchange programme was launched on December 5, 2022 to swap GHc137 billion of locally issued cedi bonds for four new bonds that will mature between 2027 and 2037.
A restructuring of the foreign component is due to start soon, the Finance Minister, Ken Ofori-Atta said.
The IMF statement said a successful support programme would be frontloaded, with particular effort at protecting social spending and the poor.
Ghana made a call to the IMF on July 1, 2022 for a progrmame, citing fiscal and monetary imbalances arising from the COVID pandemic and the Russia/Ukraine war.