An International Monetary Fund (IMF) team, headed by Mission Chief Stéphane Roudet, has finalized a staff-level agreement on the third review of the Extended Credit Facility with Ghana.
A series of meetings took place in Accra from September 24 to October 4, 2024, to discuss the progress of reforms and the government’s policy priorities.
In the end, Mr Roudet said in a statement that “the IMF staff and Ghanaian authorities have reached a staff-level agreement on the third review of Ghana’s economic program under the Extended Credit Facility arrangement”.
According to the team, the staff-level agreement is subject to IMF Management approval and Executive Board consideration.
“Upon completion of the Executive Board review, Ghana would have access to SDR 269.1 million (about US$360 million), bringing the total IMF financial support disbursed under the arrangement, since May 2023, to SDR 1,441 million (about US$1,920 million)”, it assured.
The statement highlighted that the programme’s performance has been generally satisfactory.
It noted that all quantitative targets for the end of June 2024 were met, and progress on key structural reforms has continued, despite some delays in a few areas.
“The IMF policy and reform efforts under the program have continued to deliver encouraging results,” the IMF team remarked.
The statement provided further details, noting that economic growth in the first half of 2024 exceeded initial expectations.
This growth was primarily driven by the mining, construction, and information and communication sectors.
Additionally, there was a broadening of growth sources across various sectors in the second quarter, coinciding with a continued decline in inflation.
“The recent dry spell affecting the Northern regions is expected to adversely impact agricultural output, potentially constraining growth and adding pressure on food prices for the remainder of the year. However, the government’s policy response should help mitigate these risks. In addition, the Bank of Ghana is committed to maintaining a tight monetary policy stance to support a continued decline in inflation”.
The statement highlighted that Ghana’s fiscal performance in 2024 has been strong, with the country on track to achieve a primary surplus of ½ percent of GDP on a commitment basis. This is notable despite emerging spending pressures due to the recent drought in the northern regions and challenges in the energy sector.
The team noted that discussions with the government focused on reforms aimed at enhancing sustainability and transparency in the energy sector, as well as policies to strengthen revenue collection and expenditure controls leading up to the December elections.
“We also discussed efforts to strengthen key social protection programs to protect the most vulnerable from the impact of difficult economic circumstances and ongoing policy adjustment”.
The IMF said Ghana has made remarkable progress on its public debt restructuring.
“After successfully restructuring domestic debt last year and reaching an agreement on a Memorandum of Understanding with Ghana’s Official Creditors Committee (OCC) under the G20 Common Framework in June, the government has just announced the successful completion of the consent solicitation to restructure its Eurobonds, with the exchange planned to take place in the coming weeks”.
It stated that the government has shown commitment in pursuing good-faith efforts to reach an agreement with other commercial external creditors on a debt treatment consistent with program parameters and the comparability of treatment principles.
The team noted significant improvements in the external sector of the economy in 2024, largely driven by strong exports, particularly in gold and, to a lesser extent, oil.
Additionally, higher remittances have contributed to this positive trend, resulting in international reserves accumulating beyond program targets.
“Financial stability has been maintained, with progress on recapitalization and increased bank profitability.” IMF staff met with Finance Minister Adam, Bank of Ghana Governor Addison, and their teams, as well as representatives from various government agencies. The IMF team also engaged with other stakeholders. The IMF staff team would like to express their gratitude to the Ghanaian authorities and other counterparts for their continued open and constructive”, the statement concluded.