We’re working to get third tranche approved by end of this month – IMF to Ghana

The International Monetary Fund (IMF) says Ghana is likely to receive the third tranche of $360 million by the end of this month, as the country struggles to manage its falling cedi, which has failed to withstand the strengthening of the American dollar.

In its latest press briefing on June 6, the IMF has indicated that its aim is to assist Ghana get Board approval for the release of $360 million by the end of this month. This was announced by Julie Kozack, the Fund’s Director of Communication.

“Our aim is to bring the review to the IMF’s Executive Board for approval before the end of June. This would give Ghana access to $360 million in financing, bringing the total to about $1.6 billion in disbursements since May of 2023,” she indicated.

According to the Fund, Ghana’s “strong policy and reform efforts under the three-year programme are bearing fruit and signs of economic stabilisation are emerging. For example, growth in 2023 was higher than we had initially envisaged.”

The IMF also indicated that the authorities are also making good progress on their comprehensive debt restructuring. “The domestic debt exchange was completed last year, and in January 2024 the government reached an agreement in principle with its official bilateral creditors. Ghana is also engaging its external private creditors to seek their support,” the Fund stressed.

Looking ahead

Ghana at the moment is dollar hungry! After reaching an IMF Staff-Level Agreement almost two months ago, the country is yet to meet all the necessary requirements to unlock the third tranche of its IMF loan although people familiar with the workings of the debt rework talks say negotiations and agreements are inching close to final stages at the bilateral level.

As a result, the current monetary policy tightening ongoing in the US plus the ever-increasing import bill of Ghana has placed enormous pressure on the cedi, which has lost more than 20% its value against the American greenback since the beginning of the year.

Looking ahead, the IMF believes “steadfast policy and reform implementation will be crucial to fully and durably restore macroeconomic stability and debt sustainability in Ghana” and that the “government has committed to continue implementing the programme as envisaged to ensure sustainable growth and support poverty reduction.”

Debt Sustainability

Fresh data from the Bank of Ghana show that the country’s total public debt has reached GHS658.6 billion which is almost twice the level it was in December 2022 before the Domestic Debt Exchange Programme (DDEP) was carried out.

According to the IMF, “at each review, including this one, that is in progress, the IMF does provide not only a full update of the economic situation and the macroeconomic projections, but also the debt sustainability analysis. The latest DSA will be published with the Staff Report after the Board considers the second review of the programme. And of course, also just to reiterate that it is now important for the government to continue to make progress, as it has been doing with its creditors, to ultimately restore debt sustainability for the country.”