The International Monetary Fund (IMF) is set to meet in early December to review and potentially approve a $360 million disbursement to Ghana. This funding will mark another significant milestone in Ghana’s engagement with the IMF, which has been crucial in helping the country stabilize its economy and address fiscal imbalances.
If approved, the $360 million disbursement will bring the total disbursed under the $3 billion Extended Credit Facility (ECF) agreement to $1.92 billion. This follows a series of positive assessments of Ghana’s economic performance, including progress on debt restructuring, inflation control, and economic growth that has exceeded expectations in the first half of 2024.
IMF Director of Communications, Julie Kozack, shared the update at a press briefing in Washington, D.C. on November 21, 2024. She confirmed that the IMF’s executive board would meet in early December to finalize the approval of the disbursement, noting that the performance of Ghana’s economy has been encouraging so far.
“The programme performance has been good. There has been remarkable progress on debt restructuring, and economic growth in the first half of 2024 exceeded our expectations,” said Kozack. “Inflation has declined, and the fiscal and external positions have shown marked improvement. Looking ahead, the key focus for Ghana will be the continued implementation of policy reforms to restore macroeconomic stability and debt sustainability.”
Kozack further stressed that while Ghana’s economic outlook has improved, the country must maintain its commitment to its reform agenda in the face of external challenges that many countries, including Ghana, are currently navigating.
The approval of this disbursement will be the latest installment of Ghana’s ongoing efforts to stabilize its economy through the IMF’s Extended Credit Facility (ECF), which aims to assist the country in addressing its fiscal deficits, inflation, and rising public debt.
Overview of Ghana’s IMF Deal with the Current NPP Government
Ghana’s engagement with the International Monetary Fund (IMF) under the New Patriotic Party (NPP) administration, led by President Nana Addo Dankwa Akufo-Addo and Vice President Dr. Mahamudu Bawumia, has been a critical aspect of the country’s fiscal management since the government took office in January 2017. The NPP’s economic policies, which have faced significant challenges such as a global pandemic, domestic inflation, and fiscal deficits, have necessitated Ghana’s reliance on the IMF to stabilize the economy.
Initial Engagement: 2015 IMF Agreement
While the NPP government came into power in 2017, it inherited an IMF-backed economic program initiated by the John Mahama-led National Democratic Congress (NDC) government in 2015. The NDC entered into an agreement with the IMF under a three-year Extended Credit Facility (ECF) worth $918 million to address economic imbalances. However, this agreement was abandoned by the time the NPP assumed office.
New IMF Engagement: Extended Credit Facility (ECF) Agreement 2015 – 2023
Under the NPP, the country re-engaged with the IMF in April 2021, when Ghana entered into a $3 billion Extended Credit Facility (ECF) agreement. This was after Ghana’s economy had faced several challenges, including the COVID-19 pandemic and the rising public debt. The IMF’s intervention was seen as essential to stabilizing the country’s finances and restoring macroeconomic stability.
IMF’s Support: Disbursements and Financial Assistance
Since entering the agreement, Ghana has received significant financial support from the IMF, with the total amount disbursed under the ECF program currently standing at $1.56 billion (by 2024). The country has also received the following disbursements:
- Initial Disbursement (2021): The first disbursement under the Extended Credit Facility took place in June 2021, amounting to $1 billion. This was part of the program designed to assist Ghana with COVID-19 recovery and fiscal stabilization.
- Subsequent Disbursements (2022): Further disbursements were made in 2022 as Ghana continued to meet the IMF’s policy requirements for fiscal reforms, including debt restructuring and strengthening macroeconomic policies.
- Third Review: October 2024: Following the third review in October 2024, the IMF confirmed Ghana’s progress in implementing its fiscal and debt management strategies. As of this review, Ghana is slated to receive an additional $360 million in early December 2024, which will bring the total disbursed under the ECF program to $1.92 billion. This is part of Ghana’s ongoing efforts to restore fiscal stability and sustainability.
Key Achievements and Challenges
Progress Under IMF Program:
- Debt Restructuring: Ghana has made significant progress in debt restructuring, which has been one of the key benchmarks for the IMF’s approval of disbursements. This process is aimed at reducing the country’s debt burden and improving fiscal health.
- Economic Growth: Economic growth in 2024 exceeded expectations, with the country’s performance in the first half of the year being particularly encouraging.
- Inflation Management: The NPP administration has also managed to bring down inflation, a major achievement given the global challenges.
Challenges:
- Public Debt: Despite improvements in fiscal management, the country’s public debt remains high, necessitating ongoing IMF engagement.
- External Shocks: Ghana continues to face challenges from global events such as the pandemic and global inflation, which have impacted the economy.
Future Outlook
As the IMF continues to monitor Ghana’s performance, the NPP government is expected to maintain a focus on implementing necessary reforms to stabilize the economy and meet the terms of the ECF program. Ghana’s commitment to fulfilling its policy goals, particularly in fiscal discipline, debt management, and inflation control, will be key to securing future disbursements and further progress under the IMF program.
In December 2024, the country is expected to reach another important milestone when the IMF Executive Board approves the $360 million disbursement. This approval will bring Ghana closer to completing the $3 billion program, marking a critical juncture in its economic recovery and financial stability.
