Govt expects $2.32 billion inflows by end of year

Government is expecting $2.32 billion in inflows from its development partners to stabilize the cedi.
The disbursements, expected before the end of the year, will add to the significant foreign exchange reserves already built up by the Bank of Ghana (BoG).

$6.2bn reserves
The country’s foreign reserve stood at $6.2 billion as of April 5, 2024.

Unlocking of funds
This expectation has received a big boost as the government officially received the draft Memorandum of Understanding from the Official Creditor Committee (OCC), which is expected to unlock funds so that major infrastructure projects halted across the country, can resume.
Minister of Finance, Dr. Mohammed Amin Adam, announced this in Accra during the Finance Ministry’s monthly briefing.
He said inflows from the World Bank, the third tranche of the International Monetary Fund Extended Credit Facility, and cocoa syndicated proceeds will aid the government’s efforts to stabilize the cedi.

Expected disbursements
He cited the expected disbursements of the 3rd tranche under the 2nd review of the IMF-supported PC-PEG after the IMF Executive Board approval in June 2024, disbursement from other ongoing projects, including the $150 million World Bank loan following parliamentary approval.
The Minister also mentioned the expected disbursement of $300 million under the World Bank DPO2, possibly in the 3rd quarter of 2024, disbursements of $200 million to Ghana EXIM Bank and GCB by ECOWAS Bank for Investment and Development (EBID) later in the year.

Cocoa syndication proceeds
He said the expected 2024/25 cocoa syndication proceeds in the 4th quarter of 2024 would all support the strengthening of the cedi as they boost the supply of forex to the markets.
According to Dr. Adam, the government has undertaken several measures in conjunction with the central bank to complement the expected inflows from the development partners to stabilize the cedi.
These measures include fast-tracking the fiscal consolidation process through rationalizing spending and enhancing revenue mobilization, intensifying the gold-for-oil program, and appropriate FX interventions by the BoG.

Gold for reserve initiative to be intensified
Dr. Amin also said the government would intensify the gold-for-reserve program by the central bank to shore up Ghana’s reserves.
He said with support from financial and legal advisors, the government would quickly review the draft agreement from the OCC with a view to finalizing and signing the agreement as soon as possible.
“We will then immediately sign bilateral agreements with each of the OCC members, because they have different projects which they are funding in Ghana.
“What it also means is that disbursements will start to flow in towards these projects, and we should see the contractors going back to site to continue the projects – some include major road projects,” he added.
The Minister noted that the signing of the MoU would also give some relief to the country in terms of the extension of the maturity, paving the way for monies that would have been used to service the debt to go into financing other development projects.
The signing of the MoU is critical for Ghana to get its third tranche of $360 million from the International Monetary Fund (IMF), having reached a Staff Level Agreement with the Fund’s Mission Team in April this year.
It forms part of efforts by the government to restructure some $13 billion in external debt to meet debt sustainability parameters under the ongoing Extended Credit Facility (ECF) program.
The IMF Executive Board is expected to meet next month (June) to consider the second review and approve the country’s third tranche, paving the way for the disbursement of $360 million to the country.
Signing the MoU, together with the disbursement of the $360 million, would be critical in stabilizing the country’s currency (the cedi) against its major trading partners, particularly the dollar.

Progress with Eurobond Holders
Dr. Amin said the government had achieved significant and good progress with Eurobond holders in a constructive manner.
He noted that the government was operating under a complex set of constraints as part of the International Monetary Fund’s (IMF) Debt Sustainability Thresholds.
This, he said, formed the context and basis of discussions for a mutual understanding of the financial parameters with Eurobond holders.
The minister said the government had held several rounds of negotiations on proposals and counterproposals for the Eurobond treatment and had achieved significant progress.
“This led to a series of restrictive discussions for about 3 weeks, just before the IMF Spring meetings, and it ended successfully on April 15, 2024, with very narrow differences.
Dr. Amin said the government was determined to reach an agreement with bondholders and commercial creditors promptly on terms that were consistent with the IMF program parameters.