Over 50 structural and policy reforms to rebuild economy 

Finance Minister Ken Ofori-Atta has said the International Monetary Fund (IMF) Board approval for $3 billion deal spanning three years is far from a magic solution to current economic difficulties since implementation of over 50 structural and policy reforms has just begun.

He however described the deal as a crucial step on the necessary journey of strong reforms, inclusive growth, relentless pursuit of a growth agenda geared towards restoring the economy to a place of strength, prosperity and resilience.

Over 50 structural and policy reforms

The programme sets out over 50 structural and policy reforms that should help Ghana reset economic policy fundamentals which was dislodged during the crisis.

Macroeconomic stability

The over 50 structural reforms are to ensure macroeconomic stability by reducing the level of interest payment, debt and budget deficits.

He made the statement during a joint press conference with IMF Mission Chief Stephane Roudet in Washington DC in the United States of America which was joined on Zoom by Bank of Ghana Governor Dr Ernest Addison.

Accelerated economic renaissance

Ofori-Atta noted that the debt exchange programme combined with focus on growth, fiscal sustainability, and debt sustainability should accelerate economic renaissance.

He is confident that the country will emerge stronger than before, set on the path of not just recovery but also revitalize the economy to set the pace that other countries can also follow.

Ofori-Atta assured that the government would increase revenue in addition to expenditure rationalisation measures that would create more funding resources under the programme.

He admitted that the economic toll of the economic difficulties on the citizens cannot be understated.

Strengthening social protection
In view of this, he said government has taken specific measures to strengthen social protection programmes and allocate additional resources to key initiatives.

He announced that school feeding programme, National Health Insurance Scheme (NHIS) the government Livelihood Empowerment Against Poverty (LEAP) programme will receive increased funding.

$604m to hit BoG account today

The Bank of Ghana has received information that $604 million will be released today.

$10.5bn external debt service relief target

Ghana is targeting $10.5 billion of external debt service relief from 2023-2026

Some $5.4 billion of external debt is owed to official creditors while 14.6 billion is owed to private overseas creditors.

Ofori-Atta disclosed that government aims to agree a Memorandum Of Understanding (MoU) with official creditors before the first IMF programme review schedule for November 1, 2023.

Review of quantitative objectives in June

The outcome of the review of quantitative objectives of the programme next month which includes zero financing and primary balance will determine the date for the next review and subsequent release of another $600 million

No rush in going back international capital market

The Finance Minister assured that “There is no rush in going back to the international capital market. Our expectation is that, by managing our expenditure and increasing our revenue, we will have the resources to address our needs”.

However, he said government will work towards improving sovereign credit ratings to make the country more attractive to foreign investors.

Beginning of the real of rebuilding

On his part, Dr Addison said the programme approval is just the beginning of the real rebuilding of Ghana better.

He said the approved deal should not be seen as about the money alone.

He pointed out that the deep seated reforms should anchor policy and irreversibility of policy.

Dr Addison appealed to key stakeholders to come through very quickly with their support to give meaning to the catalytic role of the Fund and help build a Ghana better.

The BoG Governor is looking forward to count on an expedited process   conclude the remaining negotiations on external debt restructuring to ensure Ghana reaps the full benefits of that compliments the reforms to under the policy resetting agenda.

Stéphane Roudet

Stéphane Roudet, the IMF Mission Chief for Ghana said the reforms in the programme will make the economy more resilient to and more likely to withstand shocks in the future.

He said the new loan would help mobilize additional external financing from development partners and provided a framework for completing its debt restructuring.

Mr Stephane Roudet, the International Monetary Fund (IMF) Mission Chief for Ghana, has assured creditors and investors across the world that Ghana’s 17th loan-support programme with the Fund will position it as a resilient economy.

He said the current programme, “is rich in structural reforms that cover a wide range of sectors that will make Ghana more resilient and withstand shocks in the future”.

He noted that the successful implementation of the programme would also “set the stage for a brighter future for Ghana”.

The Mission Chief called on all stakeholders, especially, bilateral and other external creditors to support efforts to complete Ghana’s restricting, which was critical for the implementation of the $3bn loan-support programme.’’

He acknowledged the significance of social protection programmes in the country’s economic framework.

He highlighted that ensuring the creation and strengthening of such initiatives is a key objective of the IMF collaboration.

BoG, Finance Ministry deal on repayment

A Memorandum of Understanding will be signed between Bank of Ghana and the Ministry of Finance to guide repayment of the $3 billion loan to the International Monetary Fund.

Loan terms

The loan terms include a zero interest rate with a grace period of 5.5 years and a final maturity of 10 years.

The programme has a front-loaded fiscal adjustment of 5.1 percentage points of Gross Domestic Product (GDP) over tnhree years (2023-2025) with the following Primary Balance (on a commitment basis) and fiscal adjustment (fiscal effort).

They are the Public Debt (in present value terms) to GDP ratio of 55% or less; and External Debt Service to Revenue ratio of 18% or less.

The programme will be monitored and reviewed semi-annually.

The IMF-loan facility with Ghana is a three-year Post COVID-19 Programme for Economic Growth (PC-PEG) to provide balance of payment funding as part of a broader effort to quicken the country’s recovery from an economic crisis induced by a pandemic, Russia-Ukraine war and internal structural problems.

It is also to help create the conditions for inclusive and sustainable growth and job creation, help to alleviate the exchange rate pressures and depreciating currency, and provides a catalytic effect on additional sources of financing.