Ghana is optimistic that the International Monetary Fund (IMF) will approve the initial loan tranche of $600 million as early as Wednesday, according to Minister of State in the Finance Ministry, Mohammed Amin Adam. This approval would pave the way for the funds to be disbursed within a week. Ghana is seeking a total of $3 billion from the IMF to bolster its struggling economy. IMF Managing Director Kristalina Georgieva stated on Friday that Ghana’s official creditors had provided the necessary assurances for the IMF Executive Board to proceed with finalizing the loan.
“We anticipate reaching a deal on Wednesday. Upon approval, there will be an immediate disbursement of $600 million as the first tranche,” Adam said in a telephone interview. He further mentioned that Ghana expects to receive the funds within a week of the board’s decision. A second tranche of $600 million is projected to be approved following a successful initial program review, likely to take place in November or December. The remaining funds will be disbursed in equal installments of $360 million after semi-annual reviews.
Two sources familiar with the matter confirmed that the IMF’s executive board is scheduled to convene on Wednesday to discuss Ghana’s request for financial assistance.
The receipt of IMF funds will bolster Ghana’s reserves and assist in achieving its goal of accumulating foreign reserves equivalent to three months of imports by 2026, Adam stated.
Like other smaller emerging markets facing risks, such as Sri Lanka and Zambia, Ghana has faced financial strain due to the economic repercussions of COVID-19 and geopolitical events, including Russia’s invasion of Ukraine. The government data reveals that about $5.4 billion of debt owed to official creditors is earmarked for restructuring, along with $14.6 billion owed to private overseas creditors.
Adam expressed confidence that negotiations with both sets of creditors would proceed favorably once the IMF loan is approved. “Confidence will be restored, and we expect stakeholders to cooperate and engage in negotiations with favorable terms,” he added. However, no specific dates have been set for discussions with either group of creditors.
In addition to seeking assistance from the IMF, Ghana has also turned to the World Bank to restore macroeconomic stability and address its worst economic crisis in decades, which has led to protests due to the soaring cost of living. Adam disclosed that the government is in advanced talks with the World Bank for additional support amounting to $900 million, to be disbursed in three equal installments of $300 million over three years. Negotiations are said to be nearing completion.
Furthermore, the World Bank has agreed to support a financial sector stability fund with $250 million to assist Ghana in resolving issues related to insolvency and liquidity resulting from a domestic debt exchange program, which has impacted several domestic banks. The government is also engaged in discussions with the African Development Bank for over $100 million for the stability fund, Adam revealed.