Before Ghana’s economic support program can be approved by the International Monetary Fund (IMF), the country must provide evidence that its debt levels are manageable.
Abebe Aemro Selassie, the director of the IMF’s African Department, claims as much.
On October 14, Mr. Selassie informed the media in Washington that before an agreement for a fund-assisted program could be reached, the nation also needed a reliable economic reform plan.
The Director of the IMF’s African Department stated that despite the IMF’s “extraordinary responsiveness” to the urgency of the country’s bailout request, “so much will depend on how swiftly this reform plan can be fleshed out for implementation.”
“There are also important initiatives that have to be taken in terms of how the programme will be financed so that we can move forward,” When asked when the nation could anticipate a fund-assisted program to help shore up reserves, rein in severe price hikes, and restore market and investor confidence, Mr. Selassie answered.
The press conference was a component of the October 16–18 IMF/World Bank annual meetings for 2022.
The debt stock reached its peak in September at GH402.4 billion, or 68% of GDP. It is estimated that debt servicing costs currently account for more than 80% of all income and grants.
Prior to entering the highly indebted poor countries (HIPC) in the early 2000s, debt service accounted for over 72% of total income and grants.
Regarding the prerequisite of sustainable debt, Mr. Selassie explained that the IMF had always insisted on lending to nations with manageable debt levels in order to make sure that funds and resources from a fund-assisted program were directed toward vital areas that had an impact on people’s lives and the economy.
He explained that in order to know when a settlement might be reached, the IMF must wait for the outcomes of a debt sustainability analysis (DSA) exercise and the government’s viable economic reform plan.
He claimed that although the reform plan had been submitted, the government and staff of the fund were currently questioning it.
To be clear, Mr. Selassie stated that ensuring that the money we provide goes to aiding the nation and its citizens is a crucial component of our relationship with Ghana, as it is with any other country.
Additionally, the amount to which that can occur is constrained if the debt is unsustainable.
“So, part of the work ongoing now is to assess where the debt sustainability situation is right now and how the government would like to address that. We are waiting for the results of that assessment,” Mr Selassie stated.