News Guide Africa

Tag: Extended Credit Facility (ECF)

  • Ghana’s debt outlook improves to moderate risk after IMF rating upgrade

    Ghana’s debt outlook improves to moderate risk after IMF rating upgrade

    By Adnan Adams Mohammed

     

    Ghana’s economic recovery has reached a major milestone after the International Monetary Fund (IMF) downgraded the country’s debt vulnerability profile, declaring its risk of debt distress has eased from high to moderate.

    According to the Fund’s latest Country Report, sustained fiscal discipline, exchange rate stability, and an improved medium-term debt outlook under the ongoing Extended Credit Facility (ECF) program warranted removing earlier analyst cautions and officially adjusting the risk rating.

    During the fifth review under the ECF, IMF staff had initially applied judgment to maintain a high-risk rating despite all primary debt indicators falling below their respective debt thresholds. At the time, analysts noted that lingering uncertainties around foreign exchange rates and volatile global gold prices warranted a conservative stance.

    However, the IMF confirmed that stronger economic performance and reduced market volatility have justified aligning the rating with mechanical indicator signals.

    “With continuing macroeconomic and exchange rate stability, and a clearer fiscal outlook, Staff now proposes to remove this judgement and upgrade Ghana to moderate risk of debt distress, consistent with the mechanical signal,” the IMF stated in its Country Report.

    Despite the positive reclassification, the Fund cautioned Ghanaian authorities against complacency, emphasizing that buffers remain tight and fiscal vigilance is essential.

    “Space under the external debt-service-to-revenue ratio remains limited,” the report highlighted, adding that debt vulnerabilities remain elevated. “The DSA highlights that debt dynamics remain sensitive to external shocks given Ghana’s reliance on gold and other commodity exports.”

    The IMF further warned that global trade shifts or commodity price slumps could quickly re-expose structural weaknesses.

    “Stress tests show that adverse export and commodity price shocks could push both solvency and liquidity indicators above their thresholds for a prolonged period. The exchange rate remains a key transmission channel, given the substantial share of FX-denominated external debt and non-resident holdings of domestic debt,” the Fund noted.

    Looking forward, the multilateral lender stressed that structural fiscal reforms, export diversification, and prudent debt management are vital to safeguarding Ghana’s economic gains and maintaining long-term stability.

    “Contingent liabilities represent another key source of downside risk: fiscal risks from the energy sector, financial sector recapitalization needs, and quasi-fiscal activities remain particularly salient,” the report observed. “Completing restructuring negotiations with residual external commercial creditors and signing the remaining bilateral agreements also remain a priority.”

     

  • Ghana exits IMF financing program, pivots to ‘Policy Coordination’ era

    Ghana exits IMF financing program, pivots to ‘Policy Coordination’ era

    By Adnan Adams Mohammed

    After three years of rigorous fiscal discipline, high-stakes negotiations, and a domestic debt exchange that reshaped the financial landscape, Ghana has officially closed the chapter on its Extended Credit Facility (ECF) with the International Monetary Fund (IMF).

    The government has confirmed that the nation is shifting away from direct IMF financing, opting instead for a “non-financing” support structure.

    This transition marks a pivotal moment in Ghana’s economic history, as the country attempts to prove to international markets that it can maintain fiscal sanity without a “policeman” holding the purse strings.

    The successful 6th review

    The decision follows the conclusion of the 6th and final review of the ECF program in Accra this month. While the IMF mission team noted “significant progress” in restoring macroeconomic stability, they did not leave without a word of caution.

    “Ghana has shown remarkable resilience. We see inflation trending downward and a stabilization of the primary balance,” the IMF mission lead stated during the closing press conference. “However, lingering concerns remain regarding the energy sector debt and the need for consistent revenue mobilization. The exit from a financing program does not mean an exit from discipline.”

    For many Ghanaians, the end of the program is met with a mixture of relief and skepticism. The IMF years were characterized by a “tax-heavy” regime that saw the introduction of several new levies measures that critics say pushed mining taxes into a “danger zone” and left only 32% of salaried workers able to save.

    The PCI: The new front-runner

    As Ghana weighs its post-IMF pathways, the Policy Coordination Instrument (PCI) has emerged as the clear front-runner. Unlike the ECF, the PCI does not come with a cash injection. Instead, it serves as a “seal of approval” for a country’s economic policies, signaling to investors and credit rating agencies that the government remains committed to reform.

    “The PCI is essentially a signaling tool,” explained Dr. Richmond Atuahene, a banking and economic consultant. “By signing up for this, the government is telling the world, ‘We don’t need your money anymore, but we still want you to grade our homework.’ It is a strategic move to keep the cost of borrowing low as we return to the international capital markets.”

    The shift to a non-financing program is seen as a necessary evolution. “We cannot stay on a ventilator forever,” noted a senior official at the Ministry of Finance. “The goal was always to stabilize, recover, and then walk on our own feet. The PCI provides the framework to ensure we don’t stumble back into the habits that led us to the 2023 crisis.”

    Lingering concerns amid progress

    Despite the optimistic outlook from government quarters, independent analysts warn that the “structural weaknesses” of the Ghanaian economy have not been fully cured. The National Development Planning Commission (NDPC) has recently pushed for a “Job-First” agenda, arguing that macroeconomic indicators mean little if they do not translate into living wages and employment.

    “We are exiting the program at a time when the labor market is still very fragile,” said Adnan Adams Mohammed, an economic analyst. “The IMF may be happy with our debt-to-GDP ratio, but the man on the street is still dealing with high fuel costs and a lack of disposable income. The transition to a PCI must prioritize social safety nets, not just fiscal balance sheets.”

    A test of sovereignty

    The move to non-financing support is, at its core, a test of Ghana’s economic sovereignty. For the first time in years, the government will have more room to maneuver, particularly with an election cycle on the horizon a period historically known for budget overruns in Ghana.

    “This is the real test,” says Dr. Elias Preko. “Can the government maintain the discipline of the last three years without the threat of the IMF withholding a disbursement? If we pass this test, Ghana’s credibility will be restored. If we fail, we will be back at the IMF’s door within 24 months.”

    As the ECF program officially winds down in 2026, the eyes of the global financial community are fixed on Accra. The transition to the Policy Coordination Instrument represents a bold bet that Ghana has finally learned the lessons of its 17th bailout.

    Whether this “non-financing” era leads to genuine prosperity or a return to old habits remains the most pressing question for the “Gold Coast” in the years to come.

     

     

     

     

     

  • IMF hails Ghana’s 2025 macroeconomic performance …pledges enduring partnership beyond programme exit

    IMF hails Ghana’s 2025 macroeconomic performance …pledges enduring partnership beyond programme exit

    By Adnan Adams Mohammed

    Ghana’s macroeconomic performance in 2025 has “exceeded expectations,” the International Monetary Fund (IMF) has announced, delivering a rare note of optimism and describing the year as a “very good year” anchored by firm policy choices and fiscal discipline.

    The positive assessment comes as Ghana prepares to exit its current IMF-supported programme, but the Fund has made it clear that its engagement with the nation will not cease once the Extended Credit Facility (ECF) concludes. later this year.

    Dr. Adrian Alter, the IMF Resident Representative in Ghana, speaking on Joy News’ PM Express Business Edition last week, addressed both the country’s recent successes and its future relationship with the global lender.

    2025 Performance ‘Better Than Expected’

    Dr. Alter robustly defended the Fund’s positive assessment against public debate, part of which is suggesting leniency in the Fund’s assessment, stressing that the IMF Board’s approval was grounded in tangible results.

    “The authorities implemented strong corrective actions in the aftermath of the 2024 fiscal slippages, and the 2025 macroeconomic outcomes have been better than expected,” Dr. Alter said.

    The IMF Board met on December 17 and approved Ghana’s programme as “generally satisfactory,” confirming that all indicative and performance criteria targets were met. This approval unlocked a further disbursement at the end of December, bringing total ECF support to approximately US$2.8 billion.

    Key indicators pointing to success included:

    -Inflation that slowed faster than projected;

    -Economic growth that outperformed forecasts;

    -A strengthened external position, with improved reserves and a stabilized, appreciating currency;

    “There are many, many macroeconomic indicators that perform very well at the same time,” Dr. Alter noted, attributing this to coordinated policy adjustments and reforms.

    Beyond the Programme: A Permanent Partnership

    Amid public speculation about Ghana’s economic future after the formal ECF exit, Dr. Alter pledged ongoing collaboration.

    “We will continue to be partners,” he stated firmly. He clarified that one of the IMF’s core, non-lending functions is “surveillance,” a role that ensures continued monitoring of economic developments and implemented reforms after a programme ends.

    This entails “Monitoring the economic developments, (and) the reforms that will be implemented after the programme ends,” he detailed, adding that the Fund “stays ready to also assist the Government with technical assistance and other issues that may arise.”

    Gains Must Not Be Reversed

    The strong performance in 2025, driven by the government’s commitment to fiscal discipline and the Bank of Ghana’s tight monetary policy, helped put public finances in order and stabilize the cedi.

    A key structural reform highlighted was the improvement to the Fiscal Responsibility framework and the plan to implement an independent Fiscal Council.

    Dr. Alter agreed with concerns that Ghana’s frequent returns to the IMF raise questions about policy credibility. He insisted that the new checks and balances embedded within the fiscal framework are critical safeguards against past slippages.

    These mechanisms are designed not just to restrain fiscal excesses, but to “eventually lead to more trust in the public institutions and the government,” ensuring that the hard-won gains of 2025 are sustained for the long term.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • Why Ghana should accept to extend the IMF programme

    Why Ghana should accept to extend the IMF programme

    The news that the International Monetary Fund has recommended a three month extension of its ongoing three year Extended Credit Facility economic recovery and financial bail-out programme with Ghana has unsurprisingly generated circumspection and debate in the country.

    The IMF’s recommendation is to allow additional time for reforms required to complete the sixth and final programme review. If endorsed, the extension will shift the end date of Ghana’s ECF arrangement from May 2026 to August 2026.

    Some Ghanaians are expressing frustration, seeing it as unnecessary given recent strong performance and a desire for self-management. Such critics argue that Ghana is performing well and does not need prolonged IMF supervision,, viewing it as bureaucratic convenience rather than necessity, especially as Ghana has met targets.

    They contend that the IMF is trying to extend its oversight beyond the program’s natural end, suggesting Ghana should reject it.

    On the other hand, government views it as a procedural step for orderly conclusion and continued support, highlighting achievements in meeting targets, though debates persist around specific issues like GoldBod and fiscal discipline. The government sees it as vital for sustained macroeconomic stability, with the IMF’s oversight helping to anchor reforms, more so since Ghana has met key fiscal and growth targets, leading to increased reserves and falling inflation, with the extension seen as ensuring a smooth finish.

    A core tension is between Ghana’s sovereign right to manage its affairs and the IMF’s conditions for financial support; while the government embraces the IMF’s continued engagement as a validator and stabilizer, a segment of the public feels Ghana has outgrown the need for such extensions, citing strong domestic efforts and results

    This newspaper supports government’s inclination to accept the extension. While the proposed extension of just three months would give the Fund a disproportionate amount of leverage in influencing macroeconomic policy for 2026 despite only US$200 million being left for Ghana to receive out of the US$3 billion total it would be prudent to learn invaluable lessons from yester-years.

    Firstly, the rush to exit the previous IMF programme by the immediate past Akufo-Addo administration did not end well, even though excuses such as the arrival of COVID 19 and the outbreak of the Russia Ukraine was have been made for the economic crisis that finally erupted in late 2022.

    Secondly, the replacement of the IMF’s unpopular but prudent demand management policies with populist expansionary supply side policies have repeatedly failed in the past when the transition was attempted to soon.

    The Mahama administration has a four year mandate and this newspaper believes that using the first two years of the mandate to cement macro-economic stability on which sustainable expansionary economic policy can be built is the most prudent way to go.

    The international investment, financial and development communities are all watching Ghana closely as it rebounds from its worst economic crisis in four decades. We cannot afford to put the ongoing recovery at risk like we have done so many times before, in our rush to resume outstanding economic growth.

     

     

     

     

  • Ghana-IMF bailout: Final approval expected latest Feb. – Akufo-Addo assures

    Adnan Adams Mohammed

     

    President Nana Akufo-Addo has assured Ghanaians to expect a full International Monetary Fund (IMF) approved economic policies and reforms to help revive the  economy latest in February.

     

    The government is currently waiting for the Fund’s Board approval for the staff-level agreement reached in December 2022.  The economic policies to be implemented will be supported by a new three-year arrangement under the Extended Credit Facility (ECF) of about US$3 billion.

     

    IMF believes the Ghanaian authorities’ strong reform programme is aimed at restoring macroeconomic stability and debt sustainability while protecting the vulnerable, preserving financial stability, and laying the foundation for strong and inclusive recovery.

     

    “We are going through the processes with the International Monetary Fund right now and hopefully, by the middle of this month or February, a full-blown IMF programme will be put in place which will help us repair our public finances which took a big hit from external forces”, Mr Akufo-Addo said when he gave an update on the IMF talks during a meeting with some African-American students from the Harvard Business School at the Jubilee House.

     

    The president acknowledged the challenges facing the economy: “We’ve had difficulties in the past few years trying to reposition our economy to grow again”.

     

    He said: “Some basic statistics that all of you are familiar with have pushed us back: the energy sector crisis, the global food crisis, and many others and Ghana is yet to escape from all of these crises”.

     

    However, to support the objective of restoring public debt sustainability, the government of Ghana has launched a comprehensive debt operation.

     

    In addition to a frontloaded fiscal consolidation and measures to reduce inflation and rebuild external buffers, the programme envisages wide-ranging reforms to address structural weaknesses and enhance resilience to shocks.

     

    IMF team led by Mr Stéphane Roudet, Mission Chief for Ghana, visited Accra from December 1 – 13, 2022, to discuss with the Ghanaian authorities IMF support for their policy and reform plans.

     

    At the end of the mission, Mr Roudet issued the following statement:

     

    “I am pleased to announce that the IMF team reached a staff-level agreement with the Ghanaian authorities on a three-year program supported by an arrangement under the Extended Credit Facility (ECF) in the amount of SDR 2.242 billion or about US$3 billion. The economic program aims to restore macroeconomic stability and debt sustainability while laying the foundation for stronger and more inclusive growth. The staff-level agreement is subject to IMF Management and Executive Board approval and receipt of the necessary financing assurances by Ghana’s partners and creditors.

     

    “The Ghanaian authorities have committed to a wide-ranging economic reform program, which builds on the government’s Post-COVID-19 Programme for Economic Growth (PC-PEG) and tackles the deep challenges facing the country.

     

    “Key reforms aim to ensure the sustainability of public finances while protecting the vulnerable. The fiscal strategy relies on frontloaded measures to increase domestic resource mobilisation and streamline expenditure. In addition, the authorities have committed to strengthening social safety nets, including reinforcing the existing targeted cash-transfer program for vulnerable households and improving the coverage and efficiency of social spending.

     

    “Structural reforms will be introduced to underpin the fiscal strategy and ensure a durable consolidation. These include developing a medium-term plan to generate additional revenue and advancing reforms to bolster tax compliance. This will help create space for growth-enhancing measures and social spending. Efforts will also be made to strengthen public expenditure commitment controls, improve fiscal transparency (including the reporting and monitoring of arrears), improve the management of public enterprises, and tackle structural challenges in the energy and cocoa sectors. The authorities are also committed to further bolstering governance and accountability.

     

    “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 program can be presented to the IMF Executive Board for approval.

     

    “Reducing inflation, enhancing resilience to external shocks, and improving market confidence are also important program priorities. Accordingly, the Bank of Ghana will continue to strengthen its monetary policy framework and promote exchange rate flexibility to rebuild external buffers. As part of the authorities’ debt strategy, a domestic debt exchange has been launched. The authorities are committed to taking the necessary mitigation measures to ensure financial sector stability is preserved.

     

    “IMF staff held meetings with Vice President Bawumia, Finance Minister Ofori-Atta, and Bank of Ghana Governor Addison, and their teams, as well as representatives from various government agencies. The IMF team has also continued to engage with other stakeholders. Staff would like to express their gratitude to the Ghanaian authorities, Parliament’s Finance Committee and all the private sector, trade union, and civil society representatives for their open and constructive engagement over the past few months.”