Adnan Adams Mohammed
As government intensify its effort to get the Board approval from the International Monetary Fund (IMF) soonest after missing the March-ending target, a former finance says, the government may get approval by May-ending.
Seth Terkper reacting to dire economic situation of the country indicated that, the month of May 2023 is practically feasible for Ghana to get a Fund-support programme.
Fitch Solutions last week also projected that Ghana’s staff-level agreement with the Fund will receive an executive board approval in the second quarter of 2023. Assuring that a Fund support programme will unlock critical financial assistance, shore up the country’s foreign exchange reserves and improve investor confidence. Despite, the difficulties in reaching an agreement with external debtors for a relief, Terkper still hopes may May-ending should be a realistic target.
“So if April [2023] is out then we are in May [2023], and there may be a rush of countries that will be pushing [for a Fund-support programme] – that may have concluded already – and may have had drafts being finalised for the board [IMF]. We haven’t had drafts yet as far as I know because we are still in the external debt restructuring”.
“There are fiscal economists [at IMF} dedicated in their mission whose focus is to look at fiscal developments and trends, published and unpublished about the countries. I didn’t see this in the budget [2023], but there were many prior actions. So that may come up maybe as additional prior actions or in terms of performance review there may be a discussion on it”, Mr. Terkper said.
He pointed out that even if the prior actions are completed and Ghana has agreement especially the external debt restructuring, “the entire document would have to be agreed by government as it goes through the Africa Department which is our regional department”.
“Then it may come back with questions which will be reviewed at which point the Memorandum of Economic Policy and the Letter of Intent will be signed by the Minister of Finance [Ken Ofor-Atta] and the Governor [Dr. Ernest Addison].
He therefore concluded the document would be ready to go to the board at that stage “and I think this are some of the considerations which may push us into optimistic May [2023]. Fitch Solutions may also have some intelligence suggesting so”.
Consequently, the World Bank’s April 2023 Africa Pulse Report has disclosed that, Ghana is yet to make progress with the G20 Common Framework Debt Treatment with its bilateral creditors.
This is contrary to government sources that it has reached an agreement with its bilateral creditors, particularly the Paris Club to pave way for an International Monetary Fund-support programme.
“Ghana requested a Common Framework debt treatment in early 2023; hence, progress has yet to be made. In conjunction with the Common Framework engagement, Ghana conducted a voluntary domestic debt exchange programme. Other countries engaged with private creditors and bilateral donors engaged in external restructuring efforts through bilateral engagements (Malawi)”.
”Yet, these efforts cannot replace a comprehensive and well-coordinated solution for countries in debt distress. High liquidity and solvency pressures may push more countries into an unsustainable situation that requires a comprehensive restructuring of their obligations”, it added.
Meanwhile, the International Monetary Fund (IMF) Chief, Kristalina Georgieva, last week noted that, she told China’s new top economic official, Li Qiang, they must accelerate work to reach debt restructuring agreements for countries like Zambia, Ghana and Ethiopia.
Georgieva, who met with Li and other top Chinese officials during a visit to China last month, said on Thursday she found Li very approachable and pragmatic.
She said he assured her that he wants China to play a constructive role in resolving debt relief cases.
“The truth is, and I was … very straightforward on that, it takes far too long for that (debt) resolution,” she told an event hosted by Meridian House and Politico.
“Yes, China has multiple institutions that deal with that, that makes it complicated domestically, but they have to speed up their participation.”
The United States and other Western countries have faulted China for causing delays in setting up restructuring agreements for heavily indebted countries that have asked for help under the Common Framework set up by the Group of 20 major economies.
Georgieva noted China had been helpful in reaching a debt relief deal for Chad, and also Sri Lanka, a middle-income country that was not eligible for help under the G20 framework, and she encouraged China to show progress on other cases.
About 60% of low-income countries are already in or at risk of debt distress, and about 25% of emerging economies are at high risk and facing “default-like” borrowing spreads, Georgieva said.
