News Guide Africa

Tag: Ghana IMF Program

  • Explainer: Why the cedi is slipping

    Explainer: Why the cedi is slipping

    The cedi has had one of its most dramatic years in recent memory. It opened in 2025 at GH₵14.7 to the dollar. By February it had weakened slightly to GH₵15.50 and held there until April, making it one of the longest periods of stability in more than a decade.

    Then came the surprise. Between April and May the cedi shot up, strengthening from GH₵15.50 to GH₵10.30 in just five weeks.

    From May through July and into early August it stayed stable again, hovering between GH₵10.3 and GH₵10.5. But by mid-August the tide had turned.

    In only three weeks, it has slipped to GH₵11.90, making it one of the worst-performing currencies in the third quarter of 2025.

    External conditions have not changed much. In fact, they should still be in Ghana’s favour.

    Gold prices are at record highs, the U.S. dollar remains subdued, and the Federal Reserve is expected to cut interest rates soon—moves that normally support the cedi. The pressure is instead domestic.

    Remittances, which are a critical source of foreign exchange, appear to have slowed. The earlier strength of the cedi distorted the incentive.

    For instance, if someone abroad sent US$100 in April, that converted into about GH¢1,550, enough to buy roughly 150 cement blocks. By May, the same US$100 fetched just GH¢1,030, barely enough for 100 blocks.

    With their dollars suddenly buying fewer goods in Ghana, many senders simply held back, betting that the cedi would weaken again. If it did, their transfers would convert into more cedis.

    This pause in inflows removed a steady cushion of dollars from the market just as import demand was rising.

    Imports have also surged because traders rushed to take advantage of the stronger cedi to stock up ahead of the festive season, adding to the pressure.

    At the same time, there are signs the Bank of Ghana has cut back its dollar supply to the market.

    Why scale back? The reasons are not fully clear, but there are strong clues.

    The IMF had warned earlier this year that the Bank of Ghana was intervening too heavily after it injected about US$1.4 billion into the market in the first quarter of 2025.

    In response, the Bank pledged to introduce a formal framework for forex interventions by the end of September.

    The recent slowdown in interventions may be a trial run ahead of that policy rollout.

    Another factor may be the wide gap between the interbank and forex market rates. While the cedi traded at around GH¢10.30 to the dollar on the interbank market, it was consistently between GH¢11 and GH¢12 at forex bureaus.

    Allowing some depreciation on the official side may be a way to bring the two markets into alignment, since the parallel rate divergence was distorting the market.

    Meanwhile, the Bank has also tightened its regulations: reminding businesses that pricing in dollars is illegal, enforcing declaration requirements for travelers, blocking firms from withdrawing foreign currency they never deposited, demanding stricter documentation before importers can access forex, and clamping down on remittance operators who sidestep regulations.

    The cedi’s performance so far in 2025 has been remarkable, though the recent slip is a reminder of how fragile sentiment can be.

    Whether stability holds will depend less on global winds than on how firmly the Bank of Ghana sticks to its new playbook.

    For now, with gold prices still hovering around US$3,500 per ounce and foreign reserves above US$11 billion, the Bank of Ghana has the firepower to steady the market.

    Panic may be premature.

    Caleb Wuninti Ziblim, is with JoyNews Research
    Email: caleb.ziblim@myjoyonline.com

     

     

     

  • Ghana owes IMF US$1.6bn, ranks 7th as most-indebted African country

    Dr Ernest Addison, Ken Ofori-Atta and IMF Official

     

    Adnan Adams Mohammed

     

    Data from the International Monetary Fund (IMF) indicates that, Ghana’s debt with the Fund hovers around US$1.644 billion as at December 7, 2023. 

     

    This positions Ghana as the seventh most-indebted African nation to the Fund. 

     

    On the continent; Egypt ranks first with US$11.968 billion debt, Angola follows with US$3.153 billion and South Africa places third with US$2.669 billion. In the West Africa sub-region, Cote D’Ivoire places first  owing US$2.117 billion, Nigeria comes second with US$1,840 billion followed by Ghana on the third spot. 

     

    On the global space; Argentina owes US$31.100 billion making the southern American nation the highest indebted to IMF followed by Egypt which owes US$11.968 billion. 

     

    IMF is a key player in global finance, offering monetary assistance to governments suffering economic difficulties. However, these loans from the IMF can have deep and varied effects on each country’s economy. These effects are felt in some parts of Africa, particularly in regions where the debt is unsustainable.

     

    In times of economic crisis, most countries run to the IMF for relief to stabilize their financial systems. These loans help cushion the economic adversities that countries may be going through.

     

    Currently, Ghana is in a Balance of Payment relief program with the IMF which was approved in May this year. The first tranche of the $3 billion extended credit facility hit Ghana’s account on Friday, 19 May 2023. 

     

    The Finance Minister, Ken Ofori-Atta, at the press conference noted that, the executive board approval given to the bailout, has already started impacting Ghana’s economy positively.

     

    “We are already seeing relative stability in the currency and inflation and revitalising our economy. Government with support from the IMF and collective effort with Ghanaians will work through our current challenges and emerge stronger.”

     

    Loans from global financier can also help buff the country’s finances until they can come up with a more sustainable solution to their economic problems. And, additionally, a loan from the IMF can boost a country’s credibility in the eyes of foreign investors. This rise in trust may result in higher foreign direct investment and better access to global capital markets.

     

    However, these loans if not managed or utilized properly could hurt an economy. Aside from the fact that debts owed in general can cause financial stress in any economy, as it represents an expense that the country must take responsibility for, IMF loans often come with stringent conditions, including austerity measures such as reducing public spending, cutting subsidies, and implementing tax increases.

     

    While these measures are intended to address fiscal imbalances, they can lead to social unrest and adversely affect vulnerable populations. These complications can also seep into the country’s exchange rate, making local currencies weaker than they should be.

     

  • Gov’t to pursue aggressive domestic revenue mobilisation in 2024

     

    Ken Ofori-Atta in Parliament

     

    Adnan Adams Mohammed

     

    The Government of Ghana has targeted to pursue ‘aggressive’ domestic revenue in combination with other macroeconomic stabilization and fiscal consolidation policies in next year.

     

    In reading the 2024 Budget Statement and Economic Policies to Parliament, last week, the Finance Minister indicated that, the medium-term macroeconomic framework has been prepared to achieve the objective of the IMF-Supported PC-PEG through the under-listed priorities. 

     

    They include implementation of the IMF-Supported PC-PEG which is set to achieve; macroeconomic stabilization, fiscal consolidation, ‘aggressive domestic revenue mobilisation’, expenditure rationalization, structural reforms, and social protection. The government has projected a Non-oil Domestic Revenue of 15.1 percent of GDP in 2014 against a total revenue and grants of 16.8 percent of GDP. In value the government has targeted to mobilise, Total Revenue and Grants of GH¢176.4 billion (16.7% of GDP). 

     

    “The projection is underpinned by permanent non-oil revenue measures which are expected to yield at least 0.9 percent of GDP consistent with the medium-term revenue path under the IMF-Supported PC-PEG and the Medium-Term Revenue Strategy”, Ken Ofori-Atta emphasized during the budget statement presentation.

     

    “The fiscal effort for 2024 is anchored on the following revenue and expenditure measures.”

     

    In outlining some of the revenue measures the government plans to implement, Mr Ofori-Atta noted that, notwithstanding the efforts made by Government so far, there still exists a significant 

    VAT gap that needs to be urgently addressed to improve revenue performance. 

     

    In this respect, the following measures will be put in place: the Commissioner-General’s certified invoice will be the basis for all deductible expenses for income tax purposes; the second phase of the electronic invoicing system (e-VAT) covering six hundred large taxpayers and more than two thousand small and medium taxpayers will be implemented; the implementation of the upfront VAT on imports of Vatable goods by unregistered importers will continue; A VAT flat rate of 5 percent will replace the 15 percent standard VAT rate on all commercial properties will be introduced to simplify administration and enhance revenue mobilisation; and some VAT exemptions will also be reviewed to reduce distortions and abuses in the system.

     

    Also, among the priorities are: Completion of the Debt Restructuring Programme; Finalization and implementation of the Growth strategy with a focus on value addition, export promotion, domestic and foreign investments, Agriculture, Industry, Tourism, Textile & Garments, and Digitalisation;  Leveraging climate financing for Green Growth; 

     

    Focus on completing ongoing Infrastructure for Poverty Eradication Programme (IPEP) projects rather than start new ones; Road infrastructure; Rural electrification and telephony; Complete the issuance of Ghana Cards; Promote Peace and Security; and, The 2024 general Elections (Governance Institutions, NCCE, Electoral Commission).

     

  • Ghana’s fiscal deficit-to-GDP to improve by more than half in 2023 

     

     

     

    Adnan Adams Mohammed

     

    Ghana’s fiscal deficit-to-Gross Domestic Product (GDP) ratio is estimated to record 4.6 percent as against 11.2 percent in 2022, International Monetary Fund has predicted.

     

    This 2023 estimated ratio is an improvement of about 6.6% of the 2022 figure.

     

    A further reduction in the ratio is expected in the next five year. This follows a significant cut in government expenditure and expected improvement in revenue as announced in the 2023 budget review. The fiscal deficit-to-GDP recorded in 2020 and 2021, were pegged at 17.4% and 12.0% respectively.

     

    “It is expected to fall to 4.1% of GDP in 2024 and subsequently to 3.5% of GDP in 2025 and 3.0% of GDP in 2026. It will again decline to 2.6% of GDP in 2027and 2.8% of GDP in 2028”, the October 2023 Fiscal Monitor noted.

     

    “These figures indicate that the government has adopted a tight budget spending in 2023 as captured by the IMF Programme which stresses more on revenue mobilisation.

     

    “This is also a reflection of the country’s second quarter growth rate where some sub-sectors such as Construction (-11.7%) that rely heavily on government spending contracted.”

     

    Similarly, the primary balance will fall to 0.5% of GDP, from a deficit of 3.7% in 2022.

     

    However, in the next five years, the primary balance will record a surplus.

     

    This is a result of an anticipated strong revenue growth and reduced expenditure in 2023.

     

    Meanwhile, the Fund has revealed that, the 1.2% Gross Domestic Product (GDP) growth forecast for Ghana in 2023 captured in the World Economic Outlook (WEO) was based on old data.

     

    According to the Resident Representative to Ghana, Dr. Leandro Medina, the Fund would revise the growth rate projection when it receives new data.

     

    The Resident Representative said the Fund did not take into account the recent data released by the Ghana Statistical Service.

     

    “In particular, it did not take into account the recent data that showed a higher growth rate than expected at the beginning of the programme (averaging 3.2% for the first two quarters).”

     

    Dr. Madina argued that “ At the current juncture, and based on the findings of the first ECF [Economic Credit Facility] review, the IMF Staff assessment indicated that the growth projection for 2023 will be revised up from the previous 1.5%”.

     

    The IMF lowered Ghana’s growth rate to 1.2%, from the July 2023 forecast of 1.6%.

     

    It was the second time the Fund has revised Ghana’s GDP growth for this year.

     

    In April 2023, the Fund predicted a 2.8% growth rate for Ghana in its World Economic Outlook (WEO) Report.

     

     

    The World Bank had also slightly lowered the country’s growth rate forecast for this year to 1.5%, according to its October 2023 Africa Pulse Report.

     

     

     

  • 1st IMF review set for Sept 25,… Ofori-Atta confident of second tranche of $600mn

     

     

    Adnan Adams Mohammed

     

    Ghana’s economy managers are expecting the second visit by the International Monetary Fund (IMF) after the approval of a US$3billion Extended Credit Facility in May this year.

    The visit is set to take place from September Monday, 25, 2023, through the first week of October.

    The purpose of the visit is to conduct a comprehensive assessment of the implementation progress of Ghana’s Economic Recovery Programme. The approved programme is part of a USD3-billion three-year extended credit facility aimed at supporting Ghana’s economic recovery efforts.

    “We are ready for the mission that comes at the end of September so that we can try and get the staff level agreement while the mission is here, and then we go to the board in November for the release of the 2nd tranche, which will be $600 million”, Finance Minister, Ken Ofori-Atta, said at the 3rd Ghana Investment Promotion Centre (GIPC) CEO’s Breakfast Meeting held in Accra, last week.

    “In addition to that, there are certain things we need to do with the World Bank so that we can get our DPO, which will be another $300 million. I believe that we are on course to maybe get a billion dollar to support Bank of Ghana’s balance of payment issues”, he mentioned.

    The Minister emphasised that Ghana remains on course to receive the anticipated second tranche of the IMF bailout funds in December, earmarked to support the government’s balance of payments for the years 2023 and 2024.

    Recent data from the Bank of Ghana, as reported in the June 2023 summary of the Economic and Financial Stability Report, indicates that the country’s balance of payments at the end of June 2023 registered a deficit of USD107.8 million, equivalent to approximately 0.1 per cent of the Gross Domestic Product (GDP). Notably, this deficit is significantly lower than the corresponding figure recorded during the same period in the previous year, demonstrating improvements in Ghana’s economic performance.

    Mr Ofori-Atta expressed optimism about concluding discussions with the Paris Club and bilateral creditors by year-end.

    In May 2023, Ghana received the first tranche of $600 million of a $3-billion three-year extended credit facility from the IMF, aimed at revitalising the country’s economy.

    In August 2023, the IMF emphasised the importance of the Bank of Ghana maintaining its policy mandates, despite financial setbacks experienced in the preceding fiscal year.

    The IMF underscored the need for the central bank to take decisive actions to steer inflation back toward its target of 8 percent.

    While acknowledging the Bank of Ghana’s GHS 60 billion loss due to the government’s Domestic Debt Exchange, the IMF deemed this impairment necessary to restore macroeconomic stability and public sustainability.

  • Gov’t confident to pass first IMF review; sure of securing the next US$600m

    Adnan Adams Mohammed

     

    The government will open its books in September for the International Monetary Fund (IMF) for its first review, after it successfully secured a US$3.0 billion Balance of Payment Support program for the next three years.

     

    The first review will be due in two months away which will secure Ghana another US$600 million (second tranche of support) when successful to secure a Staff-Level Agreement.

     

    The second tranche is based on some conditions that government must satisfy after an assessment by the Fund’s Visiting Staff. However, the finance minister is very optimistic of securing an agreement with the visiting staffs.

     

    “We had an IMF Staff visit about three weeks ago which went very well and we’re expecting that review in September [2023]”, the Minister of Finance, Ken Ofori Atta, speaking to Journalists at the Ghana Trade Fair Redevelopment Project Investor Conference in Accra, last week, said.

     

    Mr. Ofori-Atta hinted that the country is getting back some confidence in the economy after many efforts in meeting the IMF conditionalities.

     

    “Between cabinet and parliament, so far we’ve gone through the qualitative performance criteria. So we expect that the review will go well in September [2023] to get a Staff-Level Agreement. We’ll go to the Board in November [2023] and we’re sure we can get it”, he explained.

     

    He is optimistic that the country will recover swiftly, adding “God always put the country through and with the help of all, speaking the same language, managing our investors and bondholders well, we will get there”.

     

    Meanwhile, the Finance Minister has described as a difficult period, getting individual bondholders to suspend their intended picketing the Finance Ministry.

     

    He, therefore, called for some sacrifice from the private sector in such a period since the country is now getting out of its challenges.

     

    “I think the technical people are meeting and the Lord has been faithful so far. But I also think we as Ghanaians must appreciate that these are not normal times and with where we were last year and now, clearly, we should have some excitement for the future”.

     

  • Banks recapitalisation: gov’t support to be conditional on long-term profitability

    Adnan Adams Mohammed

     

    The International Monetary Fund (IMF) says commercial banks are expected to submit their credible time-bound plans to rebuild capital buffers on a phased basis.

     

    The banks are to raise some GH¢400 million to remain in business as most banks reported significant losses on the back of the mark-to-market valuation on their respective holdings in Government of Ghana bonds following the implementation of the DDEP. Other losses were due to higher impairments on loans and rising operating costs.

     

    The governor of the Bank of Ghana, last week, confirmed initial figures predicted by financial analysts as the value of losses suffered by the 23 banks that participated in the DDEP as GH 6.6 billion. The industry posted before-tax losses of GH¢8.0 billion in 2022 compared with a profit of GH¢7.4 billion recorded in 2021. This has prompted the second recapitalisation of banks in a period of less than five (5) years. However, the central bank says any government support from Financial Stabilisation Fund to the banks will be purposefully base on a condition.

     

    “Any government support for recapitalization will be designed to incentivize private capital injection and will be conditional on reforms to improve long-term profitability”, Dr. Ernest Addison said while answering questions during the 112th Monetary Policy Committee (MPC) press conference in Accra.

     

    “…further incentives to banks to expedite the process will include the prohibition of distributing dividends, restrictions in risk exposures, and enhanced monitoring for those that do not meet minimum CAR, and support for early recapitalization from the GFSF [Ghana Financial Stability Fund]”, he explained.

     

    The banking sector has up to September this year to provide a recapitalisation plan. This is in line with timelines set out in the financial sector strategy. According to the IMF Staff Report, the plans will be reviewed by the Bank of Ghana and finalised by the banks for BoG approval by end-September 2023 (structural benchmark). As part of this process, it said, regulatory forbearance, including capital requirements, will be lifted as soon as possible.

     

    “The BoG will monitor the expected capital shortfalls stemming from the ongoing recognition of debt restructuring losses in CAR [Capital Adequacy Ratio] calculations and ensure the plans on rebuilding capital buffers are implemented based on periodic milestones”.

     

    “Most banks are working towards that, and they have been given a period I think up to September 2023 to submit to us [BoG] as to what their recapitalizations are, and we will be following up on that. To ensure that instead of banks distributing profits that they have started making, use those resources to rebuild their capital buffers,” Governor of the Central Bank, Dr. Ernest Addison noted.

     

    Meanwhile, the Ghana Association of Banks has described the Bank of Ghana’s end-of-September timeline for banks to provide their recapitalisation plans as a prudent decision.

     

    The Chief Executive Officer, John Awuah, in an interview last week noted that, the directive is in the best interest of the banks to further aid in improving the banking sector. According to him, this would also position the banks to support economic growth.

     

    “We all heard from the Governor [Dr. Ernest Addison] just around the time we signed the debt exchange documentation that with the banks they had given us some reliefs on capital and when are we supposed to build up capital”.

     

    “What the Governor is saying is within that period they want to know when capitalization will be coming in so that they have good visibility of the plans of the banks in terms of capital accumulation and the capital to build capital buffers. I think it’s in the spirit of building a base to support the economic recovery”, he explained

     

    Mr Awuah expressed optimism about the further recovery of the banking sector in the second and third quarters of 2023.

     

    He added that the various reforms done by the sector and positive economic indicators in recent times will boost more confidence within the sector.

     

    “It will not be a day or night event, but a situation when we will witness gradual improvement within the sector. We are seeing certain positive trajectories within the economic variables.”

     

    “We have seen inflation coming down and the cedi also appreciating against other major foreign currencies so I will say the banking sector is gradually taking shape but we all have a role to play”, he continued.

     

    He however indicated that government and the regulator would have to put in more effort to improve the banking sector.

     

    Consequently, the International Monetary Fund (IMF) Staff Report on Ghana has revealed that Ghana’s financial sector was relatively robust before the debt restructuring, but the sector’s cleanup were yet to be fully implemented.

     

    According to the Fund, the aggregate Non-Performing Loans (NPLs) had declined from 17% in 2019 to about 15% at end-2022, and the sector had been well-capitalised except for a few institutions.

     

    However, several steps under the financial sector cleanup were yet to be implemented.

     

    The main profitability indicators, namely, return-on assets and return-on-equity all turned negative in 2022 because of the industry’s loss position.

     

    The 2022 audited financial statements of banks also pointed to some impairments in capital levels, although most banks posted Capital Adequacy Ratios (CAR) above the 10 percent regulatory minimum at end-December 2022.

     

    This was attributed to the effect of the roll-out of the temporary regulatory reliefs extended to the banks to cushion them against the impact of the DDEP as was done at the onset of the pandemic.

     

    However, in the first four months of this year, prudential data show some turnaround in the banking sector’s performance following the conclusion of the DDEP, and following consensus reached among stakeholders on the treatment of losses arising from same.

     

    Banks continue to rebalance their portfolios in response to the impact of the DDEP on their balance sheet shifting away from medium-to-long term investments to short term investments and increases in new loans.

     

    In general, the banks have returned to making profits in the first four months of 2023, broadly reflecting higher operating income.

     

    Loan loss provisions also increased relative to a year ago, due to the pickup in credit growth and elevated credit risks.

     

    These developments culminated in a 47.0 percent increase in profit-before-tax in April 2023 compared with 26.3 percent growth recorded during the same period a year ago.

     

    Similarly, the industry’s net income or profit-after-tax increased to GH¢2.8 billion from GH¢1.9 billion, representing 45.8 percent increase in April 2023.

     

    The industry’s return-on-assets increased to 5.5 percent from 4.7 percent, while return-on-equity rose to 36.3 percent from 22.3 percent.

     

    Key financial soundness indicators remained strong on the back of the impact of the regulatory reliefs.

     

    Also, the industry’s Capital Adequacy Ratio, adjusted for the regulatory reliefs, was 14.8 percent in April 2023, higher than the revised prudential minimum of 10 percent, but lower than the 21.3 percent recorded in April 2022.

     

    The decline in the ratio highlights the increase in risk-weighted assets of banks from the impact of exchange rate changes and some losses on mark-to-market investments.

     

    Non-Performing Loans (NPL) ratio deteriorated to 18.0 percent in April 2023 from 14.3 percent in April 2022, reflecting higher loan impairments and elevated credit risks.

     

    While, liquidity indicators have also improved following the implementation of the revised Cash Reserve Requirement.

     

    Performance of the banking sector broadly reflected the general macroeconomic operating environment as well as the impact of the DDEP as indicated in the 2022 audited financial statements.

     

    However, prudential returns for the first four months of 2023 have shown signs of recovery in the profitability of banks and a gradual improvement in the solvency positions, supported by the regulatory reliefs issued to safeguard stability of the financial sector.

     

     

     

  • Ghana misses IMF board approval deadline again

    Ghana misses IMF board approval deadline again

    Adnan Adams Mohammed

     

    Ghana is most likely to miss the deadline for the approval of the US$3 billion Extended Credit Facility from the International Monetary Fund (IMF), an economist has said.

     

    The country has already reached a staff agreement with the IMF team in last quarter last year for a US$3 billion Balance of Payment support within a three year period.

     

    The managers of the Ghanaian economy were expected to reduce the country’s debt burden and other condition in order to get the Fund’s approval. This ushered in the debt restructuring which started with the Domestic Debt Exchange Program which has been successful concluded.

    However, the country needs to complete an external debt relief program to be able to bring the debt level of the country to about 60 percent of Gross Domestic Product (GDP) which has become a nightmare. Although, President Akufo-Addo had set a March deadline for the completion of the debt relief negotiations and executive board approval, economist beliefs it is impossible.

     

    “In fact, according to the data information and assessment we’re privy to, I think it’s probably –we’re talking May thereabout in the best case scenario, and I’m actually on record on having said this,” Dr. Theo Acheampong, American based economist noted last week in an interview. “The earliest the country can complete the debt relief negotiations and get board approval for its debt relief programme is May.”

     

    He explained that, Ghana‘s debt relief negotiations comprises four major players, each with their own interests, thus projecting to adequately addressing the specific interests of all four players within the remaining weeks of March is an extreme timeline which cannot be achieved.

     

     

    “The reason is that it’s one thing restructuring your domestic debt which is covered under your local law, and it’s another thing with external debt restructuring. In this particular case here, there are four big players in the equation, each with different interests that we need to take into account.

     

    “The first player is China, but we also have the Paris club- the 22 most advanced nations that gave money to Ghana in the form of bilateral loans and credit etc. then you go the World Bank and the IMF as one, so your multilaterals you can even add African Development Bank in there. But then you also have the Eurobond holders, so these are the four big players within that architecture,” he said.

     

    He continued, “and then if you look at our external debt portflolio, 29 billion USD and if you break it down by these different or four players I’m talking about, the Chinese we owe US$1.9billion. So out of US$29 billion it’s roughly just about 7%. But the Eurobond holders we owe US$13 billion from the US$29billion so that’s about 45% or 45 pesewas of every cedi or dollar of debt that we owe to these external players.

     

    “And the complexity really is that everyone has their interest, and trying to coordinate those interests within the timeframe that the Ghanaian government is talking about is an extremely tight one and even the evidence that we have seen in other jurisdictions recently in Zambia and in other places, even when China has agreed formally to be part of the creditor group with France in Zambia’s case, there are still issues as to how you treat certain categories of debt.

     

    “So I think that the 31st March deadline most likely will not be met. It’s most likely going to go a couple of months down the line.”

     

    Consequently, the Fund has indicated that, 98% of member countries, including Ghana published a statement providing the IMF Executive Board’s assessment of the member’s macroeconomic and financial situation in 2020, and 95% of members published the IMF country report.

     

    Further indicating that, about 98% also used IMF financial resources published the reports, and 97% published additional documents, such as a country’s letter of intent and memoranda of economic and financial policies. About 93% published their technical memoranda of understanding.

     

    In a document titled “Transparency at the IMF’, the Bretton Wood institution said its approach to transparency is to disclose information in a timely way unless there are strong, specific reasons against such disclosure.

     

    “By being open and clear about its policies and the advice it provides to member countries, the IMF contributes to a better understanding of the organization and makes it easier to hold it accountable”.

     

    “Transparency by IMF member countries helps their economies function better and makes them less vulnerable to crises. By being open, member countries encourage public discussion and examination of policies, enhance accountability and credibility, and contribute to efficient and orderly functioning of global financial markets”, it added.

  • IMF bailout to be ready before end of 1st quarter

    IMF bailout to be ready before end of 1st quarter

    Adnan Adams Mohammed

     

    The government is likely to receive International Monetary Fund’s (IMF) approval before end of first quarter this year.

     

    The Fund’s recent comment gives high hope to Ghana as it makes headway with the Domestic Debt Exchange programme.

     

    In its Sub-Saharan Africa Macroeconomic Update released last month, the country has made significant progress on the Domestic Debt Exchange Programme, a key condition for the $3 billion Balance of Payment support from the Fund. Financial experts have therefore predicted that Ghana would soon receive a Board approval.

     

    “The first thing I should say is that, the IMF Executive Board approval will happen in the coming weeks”, Senior Country Risk Analyst at Fitch Solutions based in London, Mike Kruninger said in an interview.

     

    Subsequently, the Governor of the Bank of Ghana (BoG) Dr. Ernest Addison has shown high optimism that, the debt stressed nation, Ghana, will secure a deal by first quarter of 2023 dependant on the finalization of the Domestic Debt Exchange Programme(DDEP)  with all bond holders as well as creditors to support the country’s International Reserves.

     

    “We are confident that by the end of the first quarter, we should be able to get a disbursement from the IMF to help augment the foreign-exchange resources of the central bank”, Dr. Addison said at press briefing after Monetary Policy Committee meeting.

     

    Mr. Kruninger, however warned that should the approval fail to happen in quarter one of 2023, investor sentiments will remain weaker in the coming months, putting additional pressure on the cedi.

     

    “So in the first quarter of 2023, should this not happen, we will be expecting investor confidence to remain rather weak in the coming months which will put additional pressure on the exchange rate. So in that case, the currency will depreciate further more significantly than we currently anticipate”.

     

    Mr. Kruninger added that “so what will happen in that instance is inflation will remain much higher for much longer. And this will then weigh on incomes, it will weigh on overall private sector activities”.

     

    He concluded that Ghana’s growth rate will then be weaker than the 2.9% it projected.

     

    “So in this instance the economic wealth will become much weaker than the 2.9 percent that we are currently forecasting”.

     

    IMF deal would improve Ghana’s external position, restore investor sentiment

     

    Fitch Solutions had earlier said an IMF deal would help improve Ghana’s external and fiscal positions, restoring investor sentiment and easing pressure on the exchange rate.

     

    It indicated that the government would make greater progress on fiscal reforms under an IMF deal.

     

    “We believe that an IMF deal would improve Ghana’s external and fiscal positions, restoring investor sentiment and easing pressure on the exchange rate”.

     

    Ghana’s fiscal metrics had deteriorated significantly since 2020, due to weak revenue inflows and high-interest expenditures, with its budget deficit narrowing only slightly to 8.6% of Gross Domestic Product (GDP) in 2022 (from 9.3% in 2021), much wider compared to the 10-year pre-pandemic average of a 4.9% deficit.

     

    “Under an IMF programme, we expect that the government would make greater progress on fiscal reforms as the authorities seek to meet the targets to regain market access”, it pointed out

     

    Ghana is expected to reach an agreement with its creditors, both domestic and eternal bond holders over plans to restructure the country’s debt to sustainable levels.

     

    The government is also expected to publish the Auditor General’s report on the Audit of COVID-19 spending undertaken from March 2020 to June 2022.

     

    This is expected to ensure transparency and accountability of the COVID-19 emergency spending.

     

    The country is also expected to implement an upfront weighted electricity tariff of 30 percent, excluding lifeline.

     

    The GETFund, Road Fund, and District Assemblies Common Fund will start reporting on Provisional Budget in Hyperion at disaggregation level  to use all the functionalities of GIF and MIS for spending  execution , including  allotment,  issuance of payment  warrant and actual payments.

     

    Another Pre-Condition needed, is enacting legislations or Executive order to achieve the 2023 fiscal target of an adjustment of the Non-Oil Primary Balance of at least 2 percent of GDP.

     

    Government must also achieve revenue measures which will permanently improve Non-Oil Revenue to GDP ratio by at least 1.2 of GDP.

     

    It is believed that these measures will ensure a front loaded and credible fiscal adjustment in order to restore fiscal and debt sustainability.

     

    Dr. Addison announced that the Bank of Ghana has already rolled out measures that are expected to assist the commercial banks to deal with the potential risk that the Domestic Debt Exchange Programme poses to the banking sector.

     

    This includes: Reduce the Cash Reserve Ratio on Domestic Currency Deposits from 14 to 12 percent. It has also reduced the Cash Reserves Ratio on Foreign Currency Deposits from 13 to 12 percent.

     

    He indicated that, the High Regulatory Reliefs will help deal with the Capital and Liquidity issues that have come about as a result of the debt exchange programme.

     

    He also announced that the Bank of Ghana has put in place a separate liquidity arrangement for the Commercial Banks, to support their operations.

     

    Dr. Addison disclosed that the Financial Stabilization Fund will be capitalized at 1 billion dollars. The World Bank has already promised some 250 million dollars to support the fund.

     

    The Governor indicated that the programme if it is well implemented may go a long way to impact positively on the country’s international reserves, the cedi’s stability and interest payments by government.

     

    Responding to a question on when inflation could get back to the single digit range, Dr.  Addison noted that, the central bank is projecting that inflation would return to the target band within the next four years.

     

  • Editorial: Turning  around the economy in 2023

    Editorial: Turning  around the economy in 2023

    2022 goes down in the global economic history books as the year Ghana faced the worst of economic turmoil since the 1983 economic crisis the faced during the military juntas era.

    The local currency, Cedi, was ranked the worst performing currency globally. Inflation reached all time highest for a period of two decades. The country’s debt surpassed our Gross Domestic Product among other key macroeconomic indicators.

    However, the Finance Minister, Ken Ofori-Atta, says the government will put in place stronger foundations in 2023 to change the country’s economy for the better.

    He is quoted to have said; “The ensuing years will focus on building an entrepreneurial and export-driven economy as we grow the economy to protect and create jobs, tackle inflation, and strengthen our currency. The importation of food should soon be a thing of the past.

    “2023 must be our “comeback” year. A year in which we put in place stronger foundation that would allow us to change our country for the better and in a way that is enduring, inclusive and transformational.

    “We all have a role to play. And I urge us all to work together with the Government and support the various interventions being implemented to kick–start our recovery in a determined, bold and courageous way,” MrOfori-Atta said.

    The finance minister bet his hopes on the recently announced debt exchange programme and the staff-level agreement with the International Monetary Fund on a $3 billion bailout have contributed to the rebound of the economy.

    “The launch of the debt exchange programme, coupled with the signing of the Staff Level Agreement with the International Monetary Fund, have aided our stability efforts and have in particular contributed significantly to the rebound of our currency.

    “While accommodating the inputs of stakeholders, we must do all we can to sustain the gains of these initiatives keeping in sight the urgency of obtaining IMF Board approval in Q1 2023. The cost of this not succeeding will be too huge for our economy.”

    The assurance is in the good direction, if only the government machinery will walk their talk.

    We at www.newsguideafrica.com therefore urges the government to be bold enough to solicit for better counsel from all those that matters in the economic management cycle, implement bold but better economic policies that will cut unnecessary expenditures where increasing domestic revenues.

    With these, we can also be hopefully of a turnaround for the economy this year.