Support government to implement IMF deal – Finance Minister to Ghanaians

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Ghanaians have been asked to maintain their support for the government while it carries out the three-year Extended Credit Facility (ECF) program with the International Monetary Fund (IMF) by Finance Minister Dr. Mohammed Amin Adam.

He expressed confidence that things would improve in the upcoming months and stated the economy was headed in the right direction. Dr. Adam did, however, add that in order to achieve the desired outcome, all Ghanaians would need to be patient and make sacrifices.

“We will ensure that the benefits of fiscal consolidation through the reforms will lead to significant relief to Ghanaians,” he stated over the weekend at an IMF and Ministry of Finance joint news conference in Accra.

The purpose of the news conference was to announce Ghana’s successful second review of its IMF program, which resulted in the government and the fund reaching an agreement at the staff level.

Key performance indicators served as the foundation for the Second Review. These indicators included three indicative targets, six quantitative performance criteria, one structural benchmark that was due by the end of December 2023, and four more structural benchmarks that were due by the end of March 2024.

Pending approval from the fund’s Executive Board, the staff level agreement is the first step toward securing the third tranche of $360 million from the IMF.

The country’s capacity to formalize its agreement with the bilateral official creditor committee (OCC), which is co-chaired by France and China, will determine whether or not the board approves the plan, which is anticipated in June of this year. The country wants to restructure its $5.4 billion debt to bilateral creditors.

The fund anticipates that the government will formally formalize its agreement with the OCC, which was reached in January of this year under the G20 Common Framework on a comprehensive Debt Treatment Beyond the Debt Service Suspension Initiative (DSSI), by signing a memorandum of understanding (MoU).

The IMF Executive Board promptly accepted Ghana’s three-year IMF program and disbursed the first tranche of $600 million to the nation after the OCC was established in May 2023.

A staff-level agreement on the first review was obtained by the government and IMF personnel on October 6, this year. However, until the government and OCC came to an agreement, an Executive Board level permission that was meant to initiate the money’s release was not feasible.

However, the discussions with the OCC regarding debt restructuring will come to an end with the signature of the MoU.

Dr. Adam expressed confidence that the government would sign the Memorandum of Understanding with the OCC so that the IMF Executive Board could convene in June and approve the program’s second review, which would release the $360 million financing.

Many have referred to Ghana’s 17th IMF program as the most costly since people and companies are still struggling to adjust to the effects of increased levies and the country’s debt exchange scheme.

Dr. Adam acknowledged that some of the program’s reforms were extremely challenging and harsh, but he was optimistic that the nation would overcome its differences and succeed as a whole.

Stéphane Roudet, the Chief of the IMF mission in Ghana, said that overall, the program’s performance had been good and that the majority of the quantitative goals had been accomplished.

Additionally, he stated that significant progress had been made toward the major milestones of structural transformation, with the policies and reforms implemented by the authorities to reestablish macroeconomic stability and debt sustainability as well as to set the groundwork for faster and more equitable growth already yielding favorable outcomes.

“Economic activity in 2023 was more robust than initially envisaged, and growth projections for 2024 will be revised upwards. Monetary policy has remained appropriately tight, allowing for inflation to decline rapidly,” the IMF Mission Chief for Ghana said.

“On the fiscal front, consistent with the authorities’ commitments under the IMF-supported programme, the fiscal primary balance on a commitment basis improved by over four percentage points of Gross Domestic Product (GDP) in 2023 and is on track to achieve a fiscal primary surplus of 0.50 per cent of GDP in 2024,” Mr Roudet stated.

He said spending had also remained within budget limits, while the authorities had significantly expanded social protection programmes to help mitigate the impact of the crisis on the most vulnerable.

“Ghana has met its non-oil revenue mobilisation target, while making progress in implementing ambitious structural fiscal reforms to bolster domestic revenues, strengthen public financial and debt management, and enhance transparency”.

“The external sector has improved significantly, with international reserve accumulation ahead of programme objectives. Financial stability has been preserved, with banks posting solid profits in 2023,” he stated.


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