News Guide Africa

Tag: International Monetary Fund (IMF)

  • Ghana risks 18th IMF bailout without structural reforms – IEA warns

    Ghana risks 18th IMF bailout without structural reforms – IEA warns

    The Institute of Economic Affairs (IEA) has cautioned that Ghana may be forced to return to the International Monetary Fund for an 18th bailout if policymakers fail to address the deep-seated structural weaknesses undermining the economy.

    Board Chairman of the IEA, Dr. Charles Mensa, stressed that unless bold and pragmatic measures are rolled out, the country’s fiscal vulnerabilities will persist, leaving it dependent on repeated external interventions.

    Speaking on the sidelines of a Roundtable Discussion on “The Mining Regime in Ghana,” Dr. Mensa urged the government to leverage natural resource wealth, strengthen domestic revenue mobilization, and build resilience to avoid yet another IMF programme.

    “For the record, we have been to the IMF for the seventeenth time, asking for a bailout, meaning we have gone bankrupt seventeen times. Ghana is one of the largest gold-producing countries in the world, yet with all these resources, we keep going bankrupt. Why is that? It is because we have no control over our natural resources,” he opined.

    “If we don’t own our resources, we will continue to operate under this same model and very soon we will go to the IMF again for the 18th time,” he stressed.

    Ghana first turned to the International Monetary Fund (IMF) in 1966, following the overthrow of President Kwame Nkrumah by the National Liberation Council (NLC).

    The new administration sought assistance from the IMF and World Bank to stabilize the economy, with measures that included supervising the privatization of state-owned enterprises and restructuring them into commercially viable entities.

    Ghana is expected to wrap up its current US$3 billion, three-year IMF Extended Credit Facility in the first quarter of 2026. The programme, launched in 2023, was designed to tackle macroeconomic instability and mounting debt pressures.

    While implementation remains on track, analysts warn that the real test will come after the programme ends when Ghana must demonstrate fiscal discipline, sustain debt management efforts, and avoid slipping back into the cycle of imbalances that triggered repeated IMF interventions.

  • Gov’t to receive $370million from IMF

    Gov’t to receive $370million from IMF

    The Government of Ghana is awaiting disbursement of US$370 million in the coming days, this being the fourth tranche of the ongoing three-year International Monetary Fund External Credit Facility program.

    The government has expressed optimism of the IMF Board’s approval, based on a successful staff level agreement last month and the current state of the Ghanaian economy which has been touted as an unprecedented recovery with almost all macroeconomic indicators showing positive results.

    This is crucial money which the government eagerly awaits as it paid almost the same amount to service its restructured Eurobond debt last week. Upon the Board’s approval for the disbursement of approximately US$370 million, total disbursement under the ECF will be around US$2.4 billion from the start of the Program in May 2023.

    “The review is pivotal for the country”, Presidential Advisor on the economy, Seth Terkper said in an interview. “We came in as a new government with some experience to complete the fourth review of the IMF program. It will be going to the board this July. All indications including the staff who came into the country are saying that we think things have gone well and various structural measures and benchmarks and things have been met which means you can be cautiously optimistic that the IMF board will pass the program and get some injection into the economy.”

    The optimism follows the IMF’s confirmation that a staff-level agreement was reached with Ghanaian authorities on April 15 after the fourth programe review. IMF Communications Director Julie Kozack at an earlier press briefing stated that upon approval by its executive board, Ghana will be scheduled to receive about US$370 million, bringing total support under the ECF to US$2.4 billion since May 2023.

    Market watchers say the anticipated approval is a vote of confidence in Ghana’s fiscal reforms and structural adjustment efforts, which include domestic revenue mobilization, expenditure rationalization, and debt restructuring.

    Analysts add that a positive review would likely bolster investor confidence, stabilize the cedi, and further ease inflationary pressures.

     

    By Adnan Adams Mohammed

     

  • Foreign remittance can stop Ghana borrowing…If properly tracked – finance expert

    Dr Richmond Atuahene

    Adnan Adams Mohammed

    A finance expert has admonished the John Mahama administration to pay much attention to the foreign remittance sector.

    Dr Richmond Atuahene notes that, foreign remittance sector is very huge which can end Ghana’s cyclical ritual of seeking relief from the International Monetary Fund (IMF) and other multilaterals.

    Indicating that, remittances alone if tracked properly and allow all to pass through the banking system, it will be huge than the IMF $3 billion loan and other multilateral supports which mostly come with harsh conditions that affect ordinary citizens.

    “So the first thing that I want to advise the President is that, he must strengthen the remittance or even create a new unit at the Central Bank, like Bangladesh gets 95% of remittances through the banking system. We get just about 50% so the other 50% doesn’t go into the banking system”, Dr Atuahene said in an interview last week.

    “Even remittances alone will be bigger than the IMF loan. If we are able to track it, we will not go and beg for 3 billion dollars.”

    He further expatiated that, “In 2023, the World Bank told us 4.7 billion, we track only 2.8 billion so 1.9 billion is gone. Previously, 4.2 billion we track 2.1 billion, those things are gone. But, if we put in a strong system, we will be able to track more. “Once we are able to track the remittances very well, it will help the management of the economy and also help the cedi to stabilize to bring inflation down.”

    He also said the President must assembly technocrats who will help devise strategies on how to finance the nation’s huge debts owed to contractors.

    “He must appoint people who understand the microeconomic issues to help you, that will be the biggest plus for him. Then the next one will be financing the debts, I am talking about the 31 million constructors’ debts and the energy.

    “His Excellency must get a team as they had in 2010. You have a credible arrears repayment plan. So that maybe by three, or four years you have cleared and not created a new one. If you do that, I think the mantle is high but it makes it surmountable. I think with the brains and technical people if they allow them to help them they can achieve a lot in four years,” Dr. Atuahene noted.

     

     

     

  • Debt Restructuring saves Ghana economy $12bn

    Debt restructuring 

     

    Adnan Adams Mohammed

     

    The Government of Ghana says successful implementation of the Domestic Debt Exchange Programme (DDEP) has saved the country a remarkable $12 billion.

     

    Highlighting that, the DDEP played a crucial role in alleviating Ghana’s financial difficulties and reducing its debt burden, creating a more sustainable fiscal environment.

     

    The DDEP, launched in December 2022, was a key element of Ghana’s broader debt restructuring efforts. The programme required domestic bondholders to exchange their existing bonds for new ones under different terms, reducing the government’s debt servicing obligations.

     

    “The DDEP was a great success, and it paved the way for the restructuring of our bilateral debt, which also saw significant success,” Ghana’s Finance Minister, Dr. Mohammed Amin Adam, has revealed during a panel discussion at the 2024 Annual Meetings of the International Monetary Fund (IMF) and World Bank Group, last week.

     

    “… government saved $2.8 billion from bilateral debt restructuring.”

     

    According to government data, Ghana has successfully restructured $13 billion in Eurobonds, concluding the process in early October. This resulted in an outright debt cancellation of about $5 billion and debt service relief of $4.3 billion, bringing total savings to approximately $12 billion.

     

     

    “We still have an ongoing restructuring process with our commercial creditors involving about $2.7 billion, and we are working hard to conclude that,” he added.

     

    Dr. Adam emphasised that the DDEP was an essential policy measure, laying the foundation for these wider debt relief efforts, which have significantly improved Ghana’s fiscal health.

     

     

     

  • 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.

     

  • 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”.

     

  • 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”.

     

  • GIPC optimistic of IMF’s role in Ghana’s economic recovery

    Adnan Adams Mohammed

     

    The Ghana Investment Promotion Centre (GIPC) has expressed optimism regarding Ghana’s economic prospects despite the ongoing cost of living crisis and inflationary pressures.

     

    The Center has called on the economic managers to leverage on the benefits of the International Monetary Fund (IMF) program to restore, reform, and recalibrate Ghana’s economic fortunes.

     

     

    Despite recounting the sluggish rebound of the global economy but remained confident that Ghana could overcome its current challenges. GIPC top official acknowledged that, in the immediate post-IMF era of 2017, Ghana achieved an average annual growth rate of about 7%. During that time, the country was widely recognized for its sound financial management and policy innovation, earning commendation from international observers.

     

    “While we currently face hurdles in terms of the cost of living crisis and inflationary pressures on food, fuel, and finance, we must not forget that Ghana has demonstrated its resilience before,” Yaw Amoateng Afriyie, the Deputy CEO of GIPC said while addressing audience comprising economists, policymakers, and industry experts, at a recent Financial Economics Seminar held in Accra.

     

     

    “The foundations of our economic growth and stability remain intact, and it is crucial that we utilize the benefits of the IMF program to navigate through these challenging times,’ he said

     

    Mr. Afriyie further emphasized that Ghana, under the leadership of President Nana Akufo-Addo, had taken significant strides to create an enabling environment for business and investment.

     

    He reiterated the GIPC’s continues to work towards attracting both domestic and foreign investments by streamlining procedures, improving infrastructure, and ensuring policy consistency.

     

    “We firmly believe that there is no better place to do business than here in Ghana,” Afriyie declared.

     

  • IMF-Ghana bailout program: the light and darkness

    Adnan Adams Mohammed

     

    The International Monetary Fund (IMF) has finally approved Ghana’s request for a US$3 billion Balance of Payment support to stabilize the economy.

     

    Managing Director of the Fund, Kristalina Georgieva says this programme is only the first step towards restoring Ghana’s economic stability.

     

    In spite of the above assertion, some economists believe Ghana’s programme with the IMF is not just about receiving funds from the Bretton Woods institution to temporarily restore some stability in the economy, but also taking advantage of the programme’s details to raise revenue among others and limit reliance on external sources of funding and this will bring unexpected hard times. The Director of the Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana has indicated that, the first benefit of the programme is that it will bring about exchange rate stability and also help bring down inflation rate.

     

    “As we are witnessing now, the exchange rate is appreciating, if it’s stable then you will not see an automatic adjustment. So it is something that will bring some hardships in some areas but benefits as well,” Professor Peter Quartey retorted in an interview last week. “Let’s take the case of employment, I have seen in the budget statement of 2023 that there is a freeze on employment. What it means is that we will not be able to employ the number of youth we are churning out of our institutions annually and that is a huge challenge. Already youth unemployment is huge and if for three years you cannot employ, you can imagine the effect.”

     

    On revenue mobilisation, Prof Quartey stated that taxes need to be increased in some areas to help with local revenue mobilisation as the IMF has suggested. This he said would affect many Ghanaians and businesses going forward.

     

    “We are basically doing well when it comes to income tax except that it is only a few people who are overburdened. Where the challenge is, is VAT. If you look at our VAT receipts compared to what is within the sub-region, we are way off the target. That is one area that may be increased and with the effect of increasing VAT, it might bring challenges.”

     

    Already, the Minority in parliament is asking Ghanaians to be prepared for the shocks that will accompany the bailout secured from the International Monetary Fund (IMF).

     

    According to the caucus, many of the conditionalities could have been avoided if the government heeded to their call to go to the Fund earlier in 2022.

     

    “Suffice it to say that the Akufo-Addo/Bawumia government, as part of their proposal to the IMF to secure this deal, has agreed to increase utility tariffs every three months from last year. So far, since September 2022, electricity tariffs have gone up by a cumulative figure of 75.32% (27% in September 2022, 29.96% in the last quarter of 2022, and 18.36% a few days ago)”, the statement said.

     

    “Let us brace ourselves for the full consequences of this IMF deal, which will, without doubt, bite hard on Ghanaians, especially the youth. This is not a counsel of despair, but a reality that will soon dawn on all of us”, the statement.

     

    First tranche of the US$3 billion

     

    At a joint press conference of the government of Ghana and officials of the IMF on Thursday, 18 May 2023, to announce the details on the disbursement of the US$3.0 billion, Finance Minister Ken Ofori-Atta indicated that the first tranche of the $3 billion extended credit facility would hit Ghana’s account on Friday, 19 May 2023. This was confirmed by the Governor of the Bank of Ghana (BoG), Dr Ernest Addison, who was also at the press conference, saying: “Just for your information, we have had swift advice, today to receive the money. Value date tomorrow $604 million”.

     

    Mr Ofori-Atta further 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.”

     

    “This is the crucial first step on the necessary journey of strong reforms, inclusive growth, and relentless pursuit of a growth agenda geared towards restoring Ghana’s economy to a place of strength, prosperity, and resilience”, Mr. Ofori-Atta said

     

    However, Mr Ofori-Atta, has emphasised that programme is to ensure social protection.

     

    According to him, the programme will mitigate the impact of economic adjustment on the most vulnerable, whilst strengthening existing social intervention programmes such as Lively Empowerment Against Poverty (LEAP), National Health Insurance Scheme, Capitation Grant School Feeding Programme, amongst others.

     

     

    Also present at the presser was the Fund’s mission chief for Ghana, Stephane Roudet. She noted that Ghana’s reform programme is full of substance.

     

    “It is important to emphasise that this is a programme that is very rich in its structural components”, explaining, “it includes many reforms that cover a large range of sectors and these reforms will make the economy more resilient to shocks in the future and this is what the government and the IMF are looking for in this programme”.

     

    “It is a programme that will make the economy more resilient and more likely to withstand shocks in the future”, Mr Roudet added.

     

     

    Meanwhile, an Economist at the University of Ghana Business School, Prof. Godfred Bokpin has advised that, Ghana needs strict governance and productivity enhancing reforms to complement gains from the International Monetary Fund.

     

    He contends, government has a lot of work to do, in ensuring a robust macro-economic stability in the short to medium term as the country awaits the first tranche of the $3 billion facility from the IMF.

     

    Prof. Bokpin in an interview last week after the IMF board approval posited that now is the time for government to get to work.

     

    “It’s time to roll-up our sleeves and get to work. Micro-economic stability is not an end in itself, it’s only a means to an end. What then is important is how do we complement gains from the IMF, short-term usually, but the necessary governance productivity enhancing reforms that Ghana needs to do.”

     

    He wondered whether the country has taken any lesson after several visits to the Fund for a bailout.

     

    “This is our 17th IMF supported programme. I am a little surprise today, that even from government circle they are expecting the IMF programme, when towards the end of 2021, we were making the call that government needed to go to the IMF to save this economy from this embarrassment”.

     

     

    Meanwhile, the IMF has proposed the scrapping of tax exemptions, adjustment of levies on fuel, and an increase in income tax as some measures the Ghanaian government could implement following the approval of the programme.

     

    This, the IMF said, would help to boost revenue mobilization under its $3 billion support programme.

    This is contained in IMF’s May 2023 country report on Ghana’s request for the $3 billion support programme.

     

    Also, the Bank of Ghana will continue tightening monetary policy until inflation is on a firmly declining path, the International Monetary Fund (IMF) has revealed.

     

    According to the Fund, monetary and exchange rate policies under the programme will focus on reining in inflation and rebuilding foreign reserve buffers. The central bank is also expected to enhance exchange rate flexibility and limit foreign exchange interventions to rebuild external buffers.

     

    “Monetary and exchange rate policies under the program will focus on reining in inflation and rebuilding foreign reserve buffers. The Bank of Ghana will continue tightening monetary policy until inflation is on a firmly declining path and will eliminate monetary financing of the budget”, a press statement issued by the Fund after the Executive Board approved Ghana’s $3 billion bailout package indicated.

     

    The statement further indicated that an ambitious structural reform agenda is being put in place to reinvigorate private sector-led growth by improving the business environment, governance, and productivity.

     

    “Preserving financial sector stability is critical for the success of the program. Given the adverse impact of the domestic debt restructuring on balance sheets of financial institutions, the authorities will devise and implement a comprehensive strategy to rapidly rebuild financial institutions’ buffers and exit from temporary regulatory forbearance measures”, the Fund added.

     

    Outlook and risks

     

    The Fund said while growth is expected to decline this year because of the crisis and the planned fiscal consolidation, a resolution of the debt crisis and reforms should foster a recovery and reduce inflation over the medium term.

     

    Major downside risks include slippages in programme execution, delays in restructuring debt, and a deterioration in the external environment.