At last: Govt, IMF strike $3bn bailout deal …for 3-year Extended Credit Facility after reaching Staff Level Agreement

The government on Monday reached a Staff-Level Agree­ment (SLA) with the International Mone­tary Fund (IMF) on a $3 billion, three years Extended Credit Facility.

This follows six months of negoti­ations since government announced on July 1, 2022 to formally engage the IMF for balance of payment support to restore macroeconomic stability and debt sustainability since the country’s debt had grown beyond sustainable levels following a Debt Sustainability Analysis conducted by the government.

Consequently there have been three rounds of negotiations with the IMF interspersed with a number of virtual meetings in-between to en­sure both the Government of Ghana (GoG) and the IMF teams work around the clock to get the SLA by end December 2022.

An International Monetary Fund (IMF) team led by Mr Stéphane Rou­det, Mission Chief for Ghana, visited Accra on December 1 – 13, 2022, to discuss with the Ghanaian authorities IMF support for their policy and reform plans.

The SLA paves way for the IMF Management and Executive Board to approve or reject the deal to help shore up the Ghanaian economy.

That also meant that IMF staff and the Ghanaian authorities had agreed on reforms aimed at restoring macroeconomic stability and debt sustainability while protecting the vulnerable, preserving financial sta­bility, and laying the foundation for strong and inclusive recovery.

Speaking at a news conference in Accra yesterday jointly organised by the Ministry of Finance, Bank of Ghana and the IMF to announce the SLA, Finance Minister, Ken Ofori-Atta, said the government got the IMF deal in a record time of six months.

He said a lot of work had gone on behind the scenes for almost six months when government formally announced its intention to engage the IMF for an IMF-supported programme.

“Already, the economy is respond­ing positively to the news of GoG and the IMF reaching an SLA and we are eager to leverage this momen­tum to the very moment when the IMF Executive Board approves the programme request. We are already seeing significant improvements in the exchange rate with the Ghana cedi recovering against major curren­cies,” he said.

Mr Ofori-Atta said the SLA paved the way for the IMF’s Management and Executive Board to approve Ghana’s programme request early next year.

“We hope that Ghanaians will continue to support all efforts to restore macroeconomic stability and promote robust and inclusive growth. We are confident as a resilient people, and we shall rally to support this great enterprise, to restore macroeconomic stability and promote robust and inclusive growth,” he stated.

The negotiations with the IMF-supported programme were based on the Post-COVID-19 Economic Recovery Programme aimed at building a strong a resilient economy.

Mr Ofori-Atta said the IMF programme did not affect social intervention programmes and the Free Senior High School, Capitation Grant and the School Feeding Pro­grammes would not be scrapped.

Mr Roudet in his remarks said the staff-level agreement was subject to IMF Management and Executive Board approval and receipt of the necessary financing assurances by Ghana’s partners and creditors.

He said government had already launched a comprehensive debt operation to restore public debt sustainability.

“In addition to a frontloaded fiscal consolidation and measures to reduce inflation and rebuild external buffers, the programme envisages wide-ranging reforms to address structural weaknesses and enhance resilience to shocks, restore macro­economic stability and debt sustain­ability while laying the foundation for stronger and more inclusive growth,” Mr Roudet said.

“The Ghanaian authorities have committed to a wide-rang­ing economic reform programme, which builds on the government’s Post-COVID-19 Programme for Economic Growth (PC-PEG) and tackles the deep challenges facing the country. 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 mobilisation and streamline expenditure.

“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,” Mr Roudet said.

He said reducing inflation, enhanc­ing resilience to external shocks, and improving market confidence were also im­portant priorities of the programme.


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