Govt expects IMF cash to hit account in Q4 this year as Fitch predicts Ghana to receive $3bn

• Posted on August 29, 2022August 29, 2022
• by Nana Kwesi Coomson
• Comment

Government spokesperson on Governance and Security, Mr Palgrave Boakye-Danquah has revealed that the fund from the International Monetary Fund (IMF) is expected to hit the accounts of the Government of Ghana in the fourth quarter (Q4) of this year.

This comes on the heels of a meeting Ghana’s Finance Minister, Mr Ken Ofori-Atta held  with the IMF Managing Director Madam Kristalina Georgieva in Washington last week.

The IMF Boss assured that the Fund would support Ghana to stabilize its economy.

She described the meeting with Mr Ofori-Atta as ‘constructive’.

In a tweet after the meeting, he said “Constructive meeting with Ghana’s Finance Minister Ofori-Atta & his team on Ghana’s economic challenges and the way forward.

“We are ready to do our part to help the authorities stabilize the economy, lay the ground for stronger growth & help the most vulnerable.”

Commenting on this on the New Day show with Johnnie Hughes on TV3 Monday August 29, Mr Palgrave Boakye-Danquah said “It will hit the government of Ghana account in fourth quarter this year.”

Global credit rating agency, Fitch earlier estimated that the IMF programme could disburse as much as USD3 billion to Ghana.

“In July 2022, the authorities reversed a long-standing position against seeking IMF support. Fitch believes that a deal with the IMF is likely within the next six months. We estimate that a programme could disburse as much as USD3 billion and unlock budget support from other multilateral lenders.

“However, the timing of such a deal is uncertain and would be dependent on the government’s ability to present a credible fiscal reform plan in line with increasing government revenue and improving debt affordability metrics.

“The most recent IMF debt sustainability analysis, conducted in 2021, found Ghana at a high risk of debt distress and vulnerable to shocks from market access and high debt servicing costs,” Fitch said while announcing a downgrade of Ghana’s economy to ‘CCC’ from ‘B-‘ on Wednesday August 10, 2022.

The government announced on Friday July 1 that it was heading to the Fund for support. Accordingly, the IMF team, led by Carlo Sdralevich arrived into the country on July 6, to meet government officials. The team concluded its visit on Wednesday July 13.

They met with Vice President Dr. Bawumia, Finance Minister Ken Ofori-Atta, and Governor Ernest Addison of the Bank of Ghana.

They also met with the Parliament’s Finance Committee, civil society organizations, and development partners, including UNICEF and the World Bank to engage on social spending.

At the conclusion of the mission, Mr. Sdralevich issued the following statement said “Ghana is facing a challenging economic and social situation amid an increasingly difficult global environment. The fiscal and debt situation has severely worsened following the COVID-19 pandemic. At the same time, investors’ concerns have triggered credit rating downgrades, capital outflows, loss of external market access, and rising domestic borrowing costs.

“In addition, the global economic shock caused by the war in Ukraine is hitting Ghana at a time when the country is still recovering from the Covid-19 pandemic shock and with limited room for maneuver. These adverse developments have contributed to slowing economic growth, accumulation of unpaid bills, a large exchange rate depreciation, and a surge in inflation.

“The IMF team held initial discussions on a comprehensive reform package to restore macroeconomic stability and anchor debt sustainability. The team made progress in assessing the economic situation and identifying policy priorities in the near term. The discussions focused on improving fiscal balances in a sustainable way while protecting the vulnerable and poor; ensuring credibility of the monetary policy and exchange rate regimes; preserving financial sector stability; and designing reforms to enhance growth, create jobs, and strengthen governance.

“IMF staff will continue to monitor the economic and social situation closely and engage in the coming weeks with the authorities on the formulation of their Enhanced Domestic Program that could be supported by an IMF arrangement and with broad stakeholders’ consultation

“We reaffirm our commitment to support Ghana at this difficult time, consistent with the IMF’s policies.

“Staff express their gratitude to the authorities, civil society, and development partners for their constructive engagement and support during the mission.”

By Laud Nartey