The International Monetary Fund’s executive board has approved the second review of Ghana’s $3 billion loan program, permitting the immediate disbursement of around $360 million. This decision follows Ghana’s successful finalization of a deal with its official creditor committee, a crucial step required to release the second tranche of funds.
This latest disbursement brings the total IMF support to Ghana to $1.56 billion under the three-year bailout program, which aims to help the country overcome its most severe economic crisis in a generation.
The International Monetary Fund (IMF) stated that Ghana’s performance under the program has been generally strong. “The authorities’ strategy aimed at restoring macroeconomic stability and reducing debt vulnerabilities is paying off, with clear signs of stabilization emerging,” said IMF Deputy Managing Director Kenji Okamura.
A source at Ghana’s central bank mentioned that the country expects to receive the latest funds within approximately two days.
In 2022, Ghana sought financial support from the IMF as its cedi currency plummeted and inflation surged amid escalating debt-service costs. These challenges were exacerbated by years of overspending, the COVID-19 pandemic, Russia’s invasion of Ukraine, and high global interest rates. Since then, the economy has shown signs of stabilization. Economic growth surprised at 2.9% last year, and the first quarter of 2024 saw a growth rate of 4.7%. Inflation has slowed from a peak of over 54% in December 2022 to 23.1% last month, though the cedi continues to depreciate.
“Perseverance in macroeconomic policy adjustment and reforms is essential to fully restore macroeconomic stability and debt sustainability,” said IMF Deputy Managing Director Kenji Okamura. Ghana is restructuring its $30 billion debt under the G20’s Common Framework mechanism and recently reached an agreement with two bondholder groups to restructure about $13 billion of its debt, moving closer to completing its debt overhaul. This agreement will see bondholders forego approximately $4.7 billion of their loans and provide cash flow relief of around $4.4 billion until 2026, when the IMF-assisted program concludes. Bondholders will also experience a principal “haircut” of up to 37%, according to the deal’s details.
