IMF reaches Staff-Level Agreement on a $3bn, 3 years Extended Credit Facility with Ghana

• Posted on December 15, 2022December 15, 2022
• by Nana Kwesi Coomson
• Comment

Staff-Level Agreements on economic policies and reforms have been achieved between the government and the International Monetary Fund, and they will be supported by a new $3 billion, three-year Extended Credit Facility (ECF) arrangement.

The government’s robust reform program, which aimed to rebuild macroeconomic stability and debt sustainability while safeguarding the most vulnerable, maintaining financial stability, and laying the groundwork for a strong and inclusive recovery, was crucial in this decision, the fund said in a statement.

The staff-level agreement, however, is contingent on receiving the required finance assurances from Ghana’s partners and creditors as well as IMF Management and Executive Board approval.

The government has started a thorough debt operation, the statement continued, to help with the goal of restoring public debt sustainability. However, the Fund stated that before the proposed Fund-supported programme can be submitted to the IMF Executive Board for approval, substantial assurances and advancement on this front will be required.

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

“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. 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”, it explained.

According to the statement, structural measures will be implemented to support the fiscal policy and guarantee a lasting consolidation. These include moving forward with reforms to improve tax compliance and creating a medium-term plan to bring in more money.

It was mentioned that the structural changes would help make room for policies that would promote growth and social expenditure. The authorities are also committed to further bolstering governance and accountability, so 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 address structural challenges in the energy and cocoa sectors.

Continuing, the Fund said “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”.

The Vice President, Dr. Bawumia, the Finance Minister, Ken Ofori-Atta, the Governor of the Bank of Ghana, Dr. Ernest Addison, and his teams, as well as representatives from several government ministries, met with the IMF employees.

The group included other parties.

The mission team finished by thanking the government, the Finance Committee of the Parliament, as well as members of the corporate sector, labour unions, and civil society, for their forthcoming and helpful engagement over the previous few months.

-Joy Business