IMF praises Ghana’s economic development as reason for third tranche payment

Ghana has received praise from the International Monetary Fund (IMF) for its outstanding economic performance in the face of global difficulties.

IMF mission leader for Ghana, Stephane Roudette, commended the nation for its noteworthy progress under the IMF-sponsored Post COVID-19 Programme for Economic Growth (PC-PEG) during a joint news conference on July 1, 2024.

“Ghana’s performance under the PC-PEG has been commendable,” Roudette stated. “The country has surpassed expectations with a strong GDP growth of 4.7% in the first quarter of 2024, demonstrating resilience and effective implementation of fiscal policies.”

With the exception of one indicative target that states that “significant progress is being made on key structural reforms, including enhancing revenue mobilization and streamlining non-priority expenditures which, when realized, will further solidify the economy,” he said Ghana’s performance under the program has been generally strong. All quantitative performance criteria for the second review and all indicative targets have been met.

The third tranche of US$360 million was approved for release by the IMF last Friday. With the current tranche, the IMF will have paid out roughly US$1.6 billion in total throughout the course of the three-year bailout program intended to assist Ghana in overcoming its economic difficulties.

The decision was made subsequent to the nation concluding negotiations with its Official Creditor Committee, an action that was necessary in order to release the third tranche.

In his speech, Mohammed Amin Adam, the minister of finance, emphasized the strong policies that contributed to this advancement. He claimed that the recent economic revival is the result of these strong actions.

“Growth is proving to be more resilient and robust than initially programmed and the economy continues to show strong signs of recovery in Q1 of 2024. Overall Real GDP growth for Q1 2024 was 4.7%, the highest since Q1 of 2022.

This growth performance is better than the 3.1% growth recorded in the same period in 2023. Industry grew the most at 6.8%, followed by Agriculture at 4.1% and Services at 3.3%. The 2024 Q1 GDP growth rate for industry is the highest since Q4 of 2020,” he said.

Minister Amin Adam also noted the progress in managing inflation and stabilizing the exchange rate. “Headline inflation declined to 23.1% in May 2024 from 25.0% in April 2024, after peaking at 54.1% in December 2022. The Cedi has also stabilized, with year-to-date depreciation against the US dollar at 18.4%, compared to 22.0% in the same period in 2023.”

Significant achievements in debt restructuring were also underscored. He said the country reached an agreement with the Official Creditor Committee (OCC) to restructure $5.1 billion of Ghana’s official bilateral loans, resulting in debt service relief of $2.8 billion between 2023 and 2026. Additionally, government has negotiated with Eurobond holders to restructure $13.1 billion, which will lead to the cancellation of $4.7 billion in debt and provide debt service relief of $4.4 billion from 2023 to 2026.

This, the Minister maintained that government is committed to maintaining fiscal discipline and continuing structural reforms to ensure sustained economic recovery and growth.

“We are committed to sustaining our macroeconomic policy adjustment and reforms to fully restore macroeconomic stability and debt sustainability, while fostering a sustainable increase in economic growth and poverty reduction,” he added.

Source: Ghanatodayonline.com