$3bn deal: IMF boss praises Ghana for strong policies

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The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva has lauded Ghana for strong policies that ensured a successful first review of the $3billion deal.

Madam Georgieva said this in a tweet after Meeting President Nana Addo Dankwa Akufo-Addo at the Compact with Africa (CwA) Conference on Tuesday, November 21.

“Pleasure meeting with President@NAkufoAddo at #CwA. I praised Ghana’s strong policies that allowed reaching staff-level agreement on the 1st review of the IMF-supported economic program.

“We discussed how to build robust partnerships to foster prosperity for African countries,” she said.

An International Monetary Fund (IMF) staff team, led by Mr. Stéphane Roudet, Mission Chief for Ghana, held meetings in Accra from September 25 to October 6, 2023, to discuss progress on reforms and the authorities’ policy priorities in the context of the first review of Ghana’s three-year program under the Extended Credit Facility. The arrangement was approved by the IMF Executive Board for a total amount of SDR 2.242 billion (US$ 3 billion) on May 17, 2023. The team also conducted the 2023 Article IV consultation.

At the end of the mission, Mr. Roudet issued the following statement “I’m very pleased to announce that the IMF staff and Ghanaian authorities have reached a staff-level agreement on the first review of Ghana’s economic program under the Extended Credit Facility arrangement. This staff-level agreement is subject to IMF Management approval and Executive Board consideration once the necessary financing assurances have been received. An agreement with official creditors on a debt treatment in line with program parameters would provide the needed financing assurances. Upon completion of the Executive Board review, Ghana would have access to SDR 451.4 million (about US$ 600 million), bringing the total IMF financial support disbursed under the arrangement, since May 2023, to SDR 902.8 million (about US$1,200 million).

“Faced with an acute economic and financial crisis, the authorities have adjusted macroeconomic policies, successfully completed their domestic debt restructuring operation, and launched wide-ranging reforms. These actions are already generating positive results, as growth in 2023 has proven more resilient than initially envisaged, inflation has declined, the fiscal and external positions have improved, and the exchange rate has stabilized.

“Consistent with the authorities’ commitments under the Fund-supported program, fiscal performance has been strong, and Ghana is on track to lower the fiscal primary deficit on a commitment basis by about 4 percentage points of GDP in 2023. Spending has remained within program limits. To help mitigate the impact of the crisis on the most vulnerable population, the authorities have significantly expanded social protection programs. On the revenue side, Ghana has met its non-oil revenue mobilization target. Ambitious structural fiscal reforms are bolstering domestic revenues, improving spending efficiency, strengthening public financial and debt management, and enhancing transparency.

Subsequently, Finance Minister Ken Ofori-Atta told Parliament during the 2024 budget presentation that Ghana met all six of the Quantitative Performance Criteria (QPCs) during the first review of the $ 3 billion programme with the Fund.

Presenting the 2024 budget statement to Parliament on Wednesday, November 15, Mr Ofori-Atta explained that the IMF-supported Post COVID-19 Programme for Economic Growth (PC-PEG) is assessed semi-annually by the IMF through an IMF staff review mission followed by final approval by the IMF Executive Board.

Disbursements under the Programme are tied to the successful completion of each review, he added.

The reviews assess Ghana’s progress towards meeting the Quantitative Performance Criteria (QPCs), Indicative Targets (ITs), and Structural Benchmarks (SBs).

Ghana’s first review commenced with the IMF fielding a mission to undertake a staff assessment from 25th September to 6th October 2023.

This review covered the assessment of: i. six (6) Quantitative Performance Criteria (PCs);
ii. one (1) Monetary Policy Consultation Clause (MPCC) for inflation;
iii. three (3) Indicative Targets (ITs); and
iv. nine (7) Structural Reform Benchmarks (SBs) that were due at the end of September 2023.

“I am glad to inform this August house that based on the IMF’s own assessment (at the staff level) after the first review, Ghana met All six (6) of the Quantitative Performance Criteria (QPCs). The QPCs are a floor on net international reserves, ceiling on primary balance on commitment basis, ceiling on contracting non-concessional loan/guarantee, zero collateralized borrowing, and no accumulation of external debt service arrears.

“Two (2) out of the 3 Indicative Targets. The two ITs met are a floor on social spending and a floor on non-oil public revenue. The IT on zero net accumulation of payables was extended largely due to the ongoing negotiations with Energy Sector IPP on legacy debt;

“Six (6) out of the seven (7) Structural Benchmarks due end-September 2023. The six SBs met are (a) preparation and publication of arrears clearance and prevention strategy, (b) preparation and publication of financial sector strengthening strategy, (c) preparation and publication a strategy for review of earmarked (statutory) funds, (d) preparation and publication of a medium-term revenue strategy, (e) a strategy for indexation of LEAP benefits and (f) BoG to approve capital building buffer plans for banks. The seventh SB on the preparation and publication of an updated Energy Sector Recovery Plan which was expected to be completed at the end of June 2023 was strategically completed and
published on the MoF website in October 2023.

“Mr. Speaker, the outstanding performance of Ghana during the first (1st) review paved way for Ghana to reach a Staff Level Agreement (SLA) with IMF on the 6th October 2023, a record five (5) months after the Programme was approved in May 2023.”


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