IMF Board Approves $600 Million Disbursement for Ghana in Loan Program

The International Monetary Fund (IMF) has granted approval for the initial assessment of Ghana’s loan program, paving the way for an immediate payout of approximately $600 million from its $3 billion bailout initiative, as announced on Friday.

This decision follows Ghana’s successful negotiation of a $5.4 billion debt restructuring deal with its official creditors, a crucial development to unlock the second installment of IMF funding.

The IMF stated, “All quantitative performance criteria for the first review and almost all indicative targets and structural benchmarks were met.” The Fund acknowledged that Ghana’s reform efforts have contributed to improved growth, reduced inflation, and an increase in international reserves. The IMF projects a 2.3% growth in the Ghanaian economy for 2023 and 2.8% for 2024.

IMF Mission chief for Ghana, Stéphane Roudet, confirmed that the approved tranche would be available to the central bank within hours during a joint briefing with Ghanaian authorities.

Describing the decision as a “shot in the arm” for the economy, Leslie Dwight Mensah, an economist at the Institute for Fiscal Studies in Accra, emphasized the positive impact on the exchange rate, which has been susceptible to fluctuations in sentiments and central bank reserve capacity.

The release of the second tranche is expected to trigger an additional $550 million in World Bank funding for Ghana. Finance Minister Ken Ofori-Atta noted that the World Bank is scheduled to meet on January 23 to approve disbursements, including $300 million for budget support and $250 million for a fund supporting financial sector stability.

Ghana, facing its most severe economic crisis in a generation, sought IMF assistance in 2022 amidst escalating public debt-servicing costs. The country, having defaulted on most external debt, is now in the process of reaching a relief deal with private holders of approximately $13 billion in international bonds.

Ofori-Atta anticipates official engagement with bondholders to commence next week, with a potential agreement by mid-March. Regarding the next tranche of $360 million, the IMF’s Roudet emphasized the importance of the government engaging in good-faith discussions, expressing hope for substantial progress in the coming weeks. Ghana aims to restructure two-thirds of its external debt, which stood at about $30 billion at the end of 2022.