Ghana and the International Monetary Fund (IMF) have agreed at the staff level on economic policies and reforms that would be backed by a new, approximately $3 billion, three-year Extended Credit Facility (ECF) arrangement.
The authorities’ comprehensive reform strategy, according to the IMF, was aimed to provide the framework for a robust and inclusive recovery while restoring macroeconomic stability and debt sustainability.
The IMF has reached a staff-level agreement with Ghana on a three-year arrangement of about $3 billion to support the country’s s Post-COVID-19 Program for Economic Growth.
— IMF Africa (@IMFAfrica) December 13, 2022
The Ghanaian government has reportedly started a comprehensive debt operation to support the goal of restoring public debt sustainability, according to the IMF.
The agenda includes a front-loaded fiscal reduction, steps to lower inflation and develop external buffers, as well as broad reforms to address structural deficiencies and improve shock resilience.
An IMF delegation led by Mr. Stéphane Roudet, Mission Chief for Ghana, visited Accra from December 1 to 13, 2022, to discuss IMF support for Ghana’s policy and reform objectives with Ghanaian officials.
“Key reforms aim to ensure the sustainability of public finances while protecting the vulnerable. The fiscal strategy relies on frontloaded measures to increase domestic resource mobilization and streamline expenditure. In addition, the authorities have committed to strengthening social safety nets, including reinforcing the existing targeted cash-transfer program for vulnerable households and improving the coverage and efficiency of social spending.
“Structural reforms will be introduced to underpin the fiscal strategy and ensure a durable consolidation. These include developing a medium-term plan to generate additional revenue and advancing reforms to bolster tax compliance. This will help create space for growth-enhancing measures and social spending. Efforts will also be made to strengthen public expenditure commitment controls, improve fiscal transparency (including the reporting and monitoring of arrears), improve the management of public enterprises, and tackle structural challenges in the energy and cocoa sectors. The authorities are also committed to further bolstering governance and accountability.
“To support the objective of restoring public debt sustainability, the authorities have announced a comprehensive debt restructuring. Sufficient assurances and progress on this front will be needed before the proposed Fund-supported program can be presented to the IMF Executive Board for approval.
“Reducing inflation, enhancing resilience to external shocks, and improving market confidence are also important program priorities. Accordingly, the Bank of Ghana will continue to strengthen its monetary policy framework and promote exchange rate flexibility to rebuild external buffers. As part of the authorities’ debt strategy, a domestic debt exchange has been launched. The authorities are committed to taking the necessary mitigation measures to ensure financial sector stability is preserved.
“IMF staff held meetings with Vice President Bawumia, Finance Minister Ofori-Atta, and Bank of Ghana Governor Addison, and their teams, as well as representatives from various government agencies. The IMF team has also continued to engage with other stakeholders. Staff would like to express their gratitude to the Ghanaian authorities, Parliament’s Finance Committee, and all the private sector, trade union, and civil society representatives for their open and constructive engagement over the past few months.”