In a decisive move to safeguard the national currency and cement macroeconomic gains, the Securities and Exchange Commission (SEC) has issued a new directive significantly curbing the volume of capital local fund managers can move offshore.
The directive, released late Friday, comes as Ghana enters the home stretch of its three-year International Monetary Fund (IMF) support program, which is slated for completion in August 2026. The move is seen by analysts as a strategic intervention to keep liquidity within the domestic market and reduce speculative pressure on the cedi.
New Caps on Foreign Securities
The SEC circular outlines a tiered restriction strategy that fundamentally alters how Ghanaian fund managers can diversify their portfolios. The new regulations include:
Standard Fund Limit: Local fund managers are now prohibited from investing more than 20% of their total assets under management (AUM) in foreign securities.
Offshore-Specialized Funds: Specialized funds that previously enjoyed 100% offshore flexibility have had their limit slashed to 70%.
Information Sharing Requirement: In a bid to increase transparency, any remaining foreign investments can only be placed in jurisdictions that have formal information-sharing agreements with Ghana’s SEC.
Protecting the Recovery
The timing of this circular is critical. As a leading producer of gold and cocoa, Ghana is currently navigating the tail end of its most grueling economic crisis in a generation. By restricting capital flight, the regulator aims to ensure that domestic wealth contributes directly to national stability.
“The objective is clear: prioritize the cedi’s health and ensure that the progress made under the IMF program isn’t undermined by excessive capital outflows,” noted one market analyst in Accra.
Impact on Fund Managers
The directive is effective immediately, forcing fund managers to pivot their strategies toward local equities, government bonds, and domestic private equity. While the move strengthens the cedi, some industry players have expressed concerns regarding the limited depth of the local capital market to absorb the redirected funds.
The SEC, however, maintains that these measures are essential for long-term stability and to prevent the volatility that often accompanies unrestricted offshore exposure during periods of economic transition.
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 programme.
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 Programme 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 programme. 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 programme 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 programme 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.
Ghana’s energy sector remains under pressure as the International Monetary Fund (IMF) highlights persistent challenges and calls for urgent reforms under the Energy Sector Recovery Programme (ESRP) to restore fiscal stability.
In its latest staff report, the IMF revealed that Ghana’s energy sector deficit for 2024 exceeded expectations, widening by 0.6 percentage points of GDP and further straining public finances.
Persistent inefficiencies, particularly the Electricity Company of Ghana’s (ECG) failure to effectively implement the Cash Waterfall Mechanism, have worsened arrears owed to Independent Power Producers (IPPs) and fuel suppliers.
Despite these challenges, the IMF expressed optimism about forthcoming reforms. A draft energy sector strategy aimed at cutting operational costs and boosting revenue collection is expected to be finalised by June 2025 and approved by Cabinet by September 2025.
To address the sector’s vulnerabilities, the IMF proposed key medium-term measures, including:
Debt Audits: Completion of legacy debt validation audits for 2023 and 2024 by March and August 2025, respectively.
Tariff Reforms: Quarterly tariff adjustments under the Public Utilities Regulatory Commission’s (PURC) 2022-2025 Electricity and Water Major Tariff Review, backed by technical analyses to ensure financial sustainability.
Operational Review: A thorough assessment of inefficiencies across the energy sector to be led by PURC.
As part of immediate steps, a 3% average electricity tariff increase introduced in October 2024 is already in effect to address growing losses.
The IMF report noted that as of December 2023, energy sector arrears, including legacy debts, stood at USD2.1 billion, equivalent to 2.8 per cent of GDP.
The IMF cautioned that the energy sector remains a significant fiscal risk, warning that “timely implementation of these reforms is essential to mitigating vulnerabilities and achieving sector stabilisation.”
Ghana will in December receive a total of US$360 million from the International Monetary Fund (IMF) as the board is set to meet and approve the disbursement which is in line with Ghana passing the third review under the fund programme.
This amount would support the country’s balance of payment as well as stem the speed depreciation of the Ghana Cedi.
“Once the review is completed by the IMF’s executive board, Ghana would have access to about $360 million in terms of disbursement”, the Director of Communications at the IMF Julie Kozack disclosed at news conference in Washington DC USA.
“We are working, our staff are working toward a board meeting in early December and will provide additional details on the precise date when we have them”, she added.
Describing the programme performance as encouraging, Ms. Kozack said Ghana has followed the requirements needed for the country’s debt restructuring.
“What I can say in addition is that the programme performance has been good. There has been in particular remarkable progress on debt restructuring”.
She pointed out that some macroeconomic projections have been achieved under the programme, indicating some level of recovery.
“Economic growth in the first half of 2024 exceeded our expectations, exceeded our projections. Inflation has declined and the fiscal and external positions have shown marked improvement”, she said.
She cautioned against decisions that may cause slippages in the future.
“Looking ahead, what will be important for Ghana will be continued implementation of the policy and reform agendas, especially given the difficult situation that many countries in the region and globally face. And it remains essential to fully restore macroeconomic stability and debt sustainability”.
“We will, of course, have further updates on Ghana when we release the staff report, when we publish the staff report after the board meeting”, she added.
On October 4th, the IMF staff and government reached a staff level agreement on economic policies and reforms for the third review of the ECF arrangement.
The disbursement by the IMF Board in December 2024 will bring the total funds received since Ghana signed up for the IMF programme to $1.92 billion.
The board meeting in December is coming after Ghana passed most of the benchmarks set under the third review by the IMF programme.
The IMF staff at the end of the third review assessment indicated that all the end-June 2024 quantitative targets were met, and progress on key structural reforms has continued notwithstanding delays in a few areas
“The economic growth in the first half of 2024 was much higher than initially envisaged primarily fueled by mining, construction, and information and communication activity, with a broadening of the sources of growth across sectors during the second quarter as inflation continued to decline” The IMF Staff said.
Ghana government officials at the 2024 Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) in Washington DC, held separate meetings with bilateral partners to deepen economic cooperation.
Among the partners were the European Bank for Reconstruction and Development (EBRD) and the World Gold Council.
The leader of Ghana’s delegation, Governor of the Bank of Ghana (BoG), Dr. Ernest Addison and his team engaged with Dr. Heike Harmgart, Managing Director for Sub-Saharan Africa at the EBRD. Also present were Burkard Kubel-Sorger, Chief Finance Officer (CFO)/Vice President, and Artur Radziwill, Director of Country Economics, Strategy, and Policy at the EBRD.
Additionally, the Governor held a separate meeting with the World Gold Council, represented by Kurtulus Taskale Diamondopoulos, Director of Central Banks and Public Policy, and Shaokai Fan, Head of Asia-Pacific and Global Head of Central Banks.
The meetings deliberated on potential collaborations for Ghana’s economic sustainability, with mutual benefits for both the country and the development partner.
Dr. Harmgart expressed the EBRD’s interest in the operations of the Bank of Ghana, aiming to better understand the Central Bank’s role in managing the country’s macroeconomic framework, particularly its monetary policy.
Dr Harmgart praised Ghana for successfully completing its debt restructuring, a key component of the country’s ongoing $3 billion Extended Credit Facility (ECF) programme with the IMF, describing it as a model for other nations.
Dr Addison in his remarks acknowledged the sacrifices made by Ghanaians, which helped the government navigate tough times to secure the IMF loan and complete the debt restructuring programme.
He noted that these efforts have been critical to the country’s economic recovery following the COVID-19 pandemic.
The discussion with the World Gold Council, a non-governmental organization committed to enhancing transparency in the global gold supply chain, focused on standardisation.
Kurtulus Taskale Diamondopoulos outlined the Council’s role in setting standards, shaping policy, and establishing principles for a sustainable gold market.
Dr. Addison called for a partnership aimed at certifying gold refineries in Ghana to enhance the gold value chain. As Africa’s largest gold producer and the sixth largest in the world, Ghana mined 4.03 million ounces of gold in 2023. Over the past 12 months, the price of gold surged from $1,947 to $2,715.
Gold in Ghana, as in other markets, serves as a store of value, hedging against inflation and currency fluctuations.
It also functions as a central bank reserve and is widely used in jewellery, coins, and other ornaments.
Meanwhile, Ghana’s Finance Minister, Dr. Mohammed Amin Adam, speaking at same event, emphasised the crucial role of intra-African trade in bolstering the country’s economic recovery and resilience against external shocks.
He underscored the need for African nations to unite in overcoming the barriers that hinder effective trade within the continent.
“Ghana cannot achieve this alone,” he said, adding, “We must unite to address the obstacles preventing us from realising the dream of a robust intra-African trade system.”
The Finance Minister identified the African Continental Free Trade Area (AfCFTA) as a key driver for regional integration and economic growth in Ghana.
He noted that intra-African trade could catalyse job creation, economic expansion, and poverty reduction, while also acknowledging the support of global institutions like the World Bank and the International Monetary Fund (IMF) in helping to dismantle trade barriers.
“We recognise intra-African trade as essential for economic growth and are committed to eliminating the challenges with the continued support of our global partners,” Dr Adam stated.
Dr Adam also called on the IMF and World Bank to back initiatives like regional payment systems, which are crucial to unlocking the full potential of intra-African trade and facilitating seamless transactions across borders.
“Ghana and the region need guarantees to mitigate risks associated with payment systems,” he explained, highlighting the importance of a unified, intra-continental payment framework to ensure the successful implementation of the AfCFTA.
“We recognise that financial inclusion and harmonised trade routes are necessary to ensure inclusive implementation of the AfCFTA,” he added.
The Minister also engaged in bilateral talks with Ghana’s development partners.
These discussions have focused on critical issues such as Ghana’s development operations, energy sector reforms, and climate change strategies.
During these meetings, the Finance Minister stressed the important role Ghana’s partners play in stabilising the country’s economy.
He also advocated for reforms to the global financial architecture, pushing for greater African influence in shaping the flow of global capital and international support.
Dr Adam made these remarks at the ACET Roundtable on Africa’s Agenda for Financial Architecture Reform, co-hosted by the African Union and the United Nations Economic Commission for Africa (UNECA) at the Elliott School of International Affairs, George Washington University, last week.
The local currency (Cedi) has appreciated in value against international trading currencies, especially the US dollar, starting last week.
The cedi appreciated by 0.09% against the US dollar over the week, closing at a mid-rate of GH¢16.19 per DOLLAR. It also saw a 0.35% gain against the pound and a 0.28% rise against the euro.
This is attributed to successes in the country’s ability to secure restructuring of US$13 billion of Eurobond debt as well as reaching International Monetary Fund (IMF) Staff Level Agreement on the Extended Credit Facility programme.
Ghana is set to receive $360 million in financing this week, if IMF Board approves the Staff-level agreement. This could improves the country’s foreign exchange reserves and strengthen supply-side interventions.
This, some analysts have predicted that, marginal appreciation of the Cedi is expected to continue in the short term. As it currently trading at GH¢16.22 to the US dollar on the retail market.
Meanwhile, the year-to-date depreciation against the US dollar remains significant at around 22%.
Central banks have raised interest rates significantly over the past two years to combat post-pandemic inflation.
Many thought this would lead to a slowdown in economic activity. Yet, global growth has held broadly steady, with deceleration only materializing in some countries.
Why are some feeling the pinch from higher rates and not others? The answer partly lies in differences in mortgage and housing market characteristics.
The effects of rising monetary policy rates on activity partly depend on housing and mortgage market characteristics, which vary significantly across countries, as we show in a chapter of our latest World Economic Outlook.
Housing is an important channel of monetary policy transmission. Mortgages are the largest liability for households, with housing often serving as their only significant form of wealth. Real estate also accounts for a large share of consumption, investment, employment, and consumer prices in most economies.
To assess how key housing characteristics impact the effects of monetary policy on activity, our research leverages new data on housing and mortgage markets compiled across countries: we find that those characteristics vary significantly across countries. For example, the share of fixed-rate mortgages in all country-level mortgages can vary from close to zero in South Africa to more than 95 percent in Mexico or the United States.
Our results indicate that monetary policy has greater effects on activity in countries where the share of fixed-rate mortgages is low. This is due to homeowners seeing their monthly payments rise with monetary policy rates if their mortgage rates adjust. By contrast, households with fixed-rate mortgages will not see any immediate difference in their monthly payments when policy rates change.
The effects of monetary policy are also stronger in countries where mortgages are larger compared to home values, and in countries where household debt is high as a share of GDP. In such settings, more households will be exposed to changes in mortgage rates, and the effects will be stronger if their debt is higher relative to their assets.
Housing market characteristics also matter: the transmission of monetary policy is stronger where housing supply is more restricted. For example, lower rates will decrease borrowing costs for first-time home buyers and increase demand. Where supply is restricted, this will lead to home price appreciation. Existing owners will see their wealth increase as a result, leading them to consume more, including if they can use their home as collateral to borrow more.
The same holds true where home prices have recently been overvalued. Sharp price increases are often driven by overly optimistic views about future house prices. These are typically accompanied by excessive leverage, prompting spirals of falling home prices and foreclosures when monetary policy tightens, which can lead to starker income and consumption declines.
Weaker housing transmission
Mortgage and real estate markets have undergone several shifts since the global financial crisis and the pandemic. At the beginning of the recent hiking cycle and after a long period of low interest rates, mortgage interest payments were historically low, the average maturity was long, and the average share of fixed-rate mortgages was high in many countries. In addition, the pandemic led to population shifts away from city centers and to relatively less-supply-constrained areas.
As a result, the housing channels of monetary policy may have weakened, or at least been delayed, in several countries.
Country experiences vary widely. Changes in mortgage market characteristics in countries such as Canada and Japan suggest a strengthening of the transmission of monetary policy through housing. This is driven mainly by a declining share of fixed-rate mortgages, an increase in debt, and more constrained housing supply. By contrast, transmission seems to have weakened in countries such as Hungary, Ireland, Portugal, and the United States, where characteristics have moved in the opposite direction.
Calibrating policy
Our findings suggest that a deep, country-specific understanding of housing channels is important to help calibrate and adjust monetary policy. In countries where the housing channels are strong, monitoring housing market developments and changes in household debt service can help identify early signs of overtightening. Where monetary policy transmission is weak, more forceful early action can be taken when signs of overheating and inflationary pressures first emerge.
What about now? Most central banks have made significant progress toward their inflation target. It could follow from the discussion that, if transmission is weak, erring on the side of too much tightening is always less costly. However, overtightening, or leaving rates higher for longer, could nevertheless be a greater risk now.
While fixed-rate mortgages have indeed become more common in many countries, fixation periods are often short. Over time, and as rates on these mortgages reset, monetary policy transmission could suddenly become more effective and so depress consumption, especially where households are heavily indebted.
The longer time rates are kept high, the greater the likelihood that households will feel the pinch, even where they have so far been relatively sheltered.
By Mehdi Benatiya Andaloussi, Nina Biljanovska, Alessia De Stefani, Rui C. Mano, International Monetary Fund (IMF) blog
Ghana has been negotiating with the Independent Power Producers (IPPs) since last year to rework the arrears as part of its external debt revamp.
However, in recent concern raised by the private power producers, they are threatening to walk away from the US$1.6 billion arrears payment negotiation.
This is huge threat to the success of the efforts made for the past years to restructure the country’s debts.
“The government has not kept its side of the bargain on payments, despite some producers agreeing to haircuts and others cutting energy charges”, Elikplim Apetorgbor, chief executive officer of Independent Power Generators Ghana, has said in an interview last week. “We were expecting that by now half of the outstanding would be settled and a payment plan prepared for the remainder.”
“We are compelled to re-evaluate our concessions and may be forced to demand the full settlement of arrears”, he emphasized.
The government has paid about US$400 million as of the end of December, Apetorgbor said. Part of the deal with the IPPs was for the state-owned power distributor Electricity Company of Ghana to remain current on its payments to them from June 2023 onward. But it was only paying 70% of the monthly bills and cut that to 21% in the last three months, Apetorgbor said.
However, according to Bloomberg news on the same matter, “a Finance Ministry spokeswoman didn’t immediately respond to requests for comment.”
Independent power producers
The country is restructuring almost all of its US$45 billion of debts to make them sustainable under an International Monetary Fund program. This standoff could potentially affect that assessment.
Ghana won an IMF bailout in 2023 after debt ballooned and it missed a eurobond payment. It concluded a domestic debt rework last year and hopes to soon finalize talks to reorganize US$5.4 billion of loans and US$13 billion of eurobonds.
The nine member-IPGG produces over 60% of Ghana’s peak demand of 3,618 megawatts and 80% of its thermal generation.
Data from the Bank of Ghana indicates that, total revenue and grants for the first four months of 2024 amounted to GH¢30.4 billion (2.9 percent of GDP) compared with a target of GH¢37.7 billion (3.6 percent of GDP).
Bank of Ghana
Also, total expenditures on commitment basis, including other outstanding payments for the period amounted to GH¢49.0 billion (4.7 percent of GDP) compared with a target of GH¢55.5 billion (5.3 percent of GDP).
According to the Bank of Ghana Governor, Dr Ernest Addison, Ghana’s fiscal performance is “broadly” in line with the targets agreed under the International Monetary Fund (IMF) Balance of Payment supported programme.
Provisional data on the execution of the budget “shows that the primary balance (commitment basis) was in a deficit of 0.6 percent compared with a target deficit of 0.2 percent.”
The overall broad budget balance (commitment basis), “was a deficit of 1.8 percent of GDP compared with a deficit target of 1.7 percent of GDP.
All things being equal, Ghana’s $3 billion extended credit facility programme second review by the International Monetary Fund Staff Level team is ready to be presented the Board for consideration before June ending, a senior official of IMF has said.
The second staff review, if approved by the Board will pave way for the release of $360 million more as the third tranche of the $3 billion facility.
International Monetary Fund
The IMF staff team and Ghana’s team reached a staff-level agreement for the second review of the programme in April this year. Already, Ghana has received $1.2 billion in two separate $600 million tranches.
“The aim is to bring the review to the IMF’s Executive Board before the end of June, and once approved by the Board, the review would give Ghana access to about $360 million,” Ms. Julie Kozack, Director of Communications of the International Monetary Fund (IMF), has said at a press conference in Washington, D.C. last week.
She noted that Ghana’s exonomy has seen progress since the programme started.
“The authorities’ strong policy and reform efforts under the programme are bearing fruit, and signs of economic stabilisation are emerging.”
She added: “Growth, for example, in 2023, was higher than anticipated, and the growth projections are being revised upward.”
Also, she noted: “Inflation has been declining rapidly, the fiscal and external positions have improved, and exchange rate volatility has declined quite significantly.”
“The authorities are making good progress on their comprehensive debt restructuring.” “The domestic debt exchange was completed last year, and on January 12th, the government reached agreement in principle with its official bilateral creditors.”
‘Ghana is also engaging with external private creditors to seek their support”, Ms Kazack added.
