IMF reaches staff-level agreement on third review of extended credit facility with Ghana

IMF reaches staff-level agreement on third review of extended credit facility with Ghana

October 4, 2024

• IMF staff and the Ghanaian authorities have reached a staff-level agreement on economic policies and reforms to complete the third review of the 36-month ECF-backed program. Once the review is approved by the IMF leadership and completed by the IMF Executive Board, Ghana will have access to approximately USD 360 million in financing.
• The results of the program were generally satisfactory, with significant progress in debt restructuring. Economic growth in the first half of 2024 exceeded expectations, inflation continued to decline, and the fiscal and external situation showed marked improvement.
• The continued implementation of the policy and reform agenda, especially given the upcoming general elections, remains crucial to fully restoring macroeconomic stability and debt sustainability.

Accra, October 4, 2024: A team of International Monetary Fund (IMF) staff, led by Stéphane Roudet, Head of Mission in Ghana, met in Accra from 24 September to 4 October 2024 to discuss progress on reforms and the authorities’ policy priorities in the context of the Third Review Ghana’s three-year extended credit line program. The arrangement was approved by IMF Management Board for a total amount of SDR 2.242 billion ($3 billion) on May 17, 2023.

At the end of the mission, Mr. Roudet issued the following statement:

“IMF staff and the Ghanaian authorities have reached a staff-level agreement on the third review of Ghana’s economic program under the Extended Credit Agreement. This staff-level agreement is subject to approval by the IMF management and consideration by the Executive Board. Upon completion of the Board’s review, Ghana would have access to SDR 269.1 million (approximately USD 360 million), bringing the total IMF financial support disbursed under the agreement from May 2023 to SDR 1,441 million (approximately USD 1,920 million). .

“The results of the IMF-supported program are generally satisfactory. All quantitative targets set for end-June 2024 have been achieved and, despite delays in several areas, progress continues on key structural reforms. Government policies and reform efforts under the program continue to produce encouraging results.

“Economic growth in the first half of 2024 was significantly higher than initially expected, led by mining, construction and information and communications activities, with cross-sectoral sources of growth broadening in the second quarter. Inflation continues to fall. The recent drought that has hit northern regions is expected to have an adverse impact on agricultural production, potentially limiting economic growth and increasing pressure on food prices for the rest of the year. However, the government’s policy response should help reduce this risk. Additionally, the Bank of Ghana is committed to maintaining a tight monetary policy stance to support a further decline in inflation.

“The fiscal performance in 2024 is strong so far, with Ghana on track to achieve a commitment-based primary surplus of ½ percent of GDP, despite emerging spending pressures from the recent drought in northern regions and difficulties in the energy sector. Discussions with the authorities focused on reforms to increase the stability and transparency of the energy sector, as well as policies and reforms to strengthen revenue collection and expenditure controls in the run-up to the December elections. We also discussed efforts to strengthen key social protection programs to protect the most vulnerable people from the impacts of difficult economic conditions and ongoing policy adjustments.

“Ghana has made remarkable progress in restructuring its public debt. Following the successful restructuring of the country’s national debt last year and reaching an agreement in June on a Memorandum of Understanding with Ghana’s Official Committee of Creditors (OCC) under the G20 Common Framework, the government has just announced the successful completion of the approval process for the restructuring of its Eurobonds, with the exchange scheduled for the coming weeks. The authorities commit to making good faith efforts to reach an agreement with other external commercial creditors on debt treatment consistent with the program parameters and comparability of treatment arrangements.

“The external sector saw significant improvement in 2024, driven by strong exports – particularly gold and, to a lesser extent, oil – and higher remittances as international reserves accumulated in excess of program targets. Financial stability was maintained, progress was made in recapitalization and increased profitability of banks.”

IMF staff met with Finance Minister Adam, Governor of the Bank of Ghana Addison and their teams, as well as representatives of various government agencies. The IMF team also engaged with other stakeholders. The IMF staff team would like to express its gratitude to the Ghanaian authorities and other partners for their continued open and constructive engagement.