Adnan Adams Mohammed
Fitch Solutions has predicted that the International Monetary Fund (IMF) will approve the US$3 billion balance of payment (BoP) support package for Ghana in the 4th quarter of this year.
The financial support which is expected to come in tranches, according to Fitch, at least US$1.0 billion dollars may be released to Ghana government by the end of the first quarter of 2023.
Finance Minister, Ken Ofori-Atta, early last month revealed that, Ghana could get about US$3 billion from the IMF higher than the initial US$1.0 billion dollars the government wanted.
“An IMF financial package of US$3.0 billion, which we expect to be approved in quarter 4, 2022, should alleviate pressure on Ghana’s external position in 2023”, Fitch Solutions foretold last week in its latest report on the country dubbed “Ghana’s Private Infrastructure Investment Set For Medium-Term Recovery”.
“Ghana’s weak external position to strengthen on expected IMF deal, despite a widening balance of payments deficit caused by large financial account outflows, we believe that an expected IMF deal will help to support Ghana’s external position in 2023”.
However, some analysts believe a Fund programme will not be approved until at least the end of quarter one, 2023.
This is because the Fund is yet to conduct a Debt Sustainability Analysis (DSA) on Ghana’s debt.
In the first quarter of 2022, capital and financial outflows increased by 188.7% year-on-year to $690 million, driven by net portfolio reversals and outflows of Foreign Direct Inflows.
Combined with the country’s current account deficit, Fitch Solutions, said this has resulted in an overall balance of payments deficit of US$934 million in the first quarter of 2022, as against a deficit of $430 million in quarter one, 2021.
“We expect net capital flows to remain in negative territory over second-half of 2022, given deteriorating investor sentiment towards Ghanaian assets, as reflected by the currency sell-off and rising bond yields. At the same time, Ghana is unable to tap international capital markets to finance the deficit, and this is putting downward pressure on its foreign exchange reserves, which have fallen to $7.7 billion in June, from $9.8 billion in January [2022].”
