Ghana, a nation in West Africa that is experiencing a severe economic crisis, received approval from the International Monetary Fund (IMF) on Wednesday (May 17, 2023) for a $3 billion loan, with the first immediate disbursement amounting to around $600 million.
The Extended Fund Facility will be used to spread out the 36-month program, which was approved by the IMF board.
According to Fund Managing Director Kristalina Georgieva, mentioned in an IMF release, it intends to “restore macroeconomic stability and debt sustainability, as well as implement broad-ranging reforms to build resilience and lay the foundation for stronger and more inclusive growth.”
Congratulations to President @NAkufoAddo & his team on the $3 billion IMF-supported program approved by our Executive Board.
We stand with Ghana as it implements reforms to address the current economic and financial crisis and help build a better future for all Ghanaians.
— Kristalina Georgieva (@KGeorgieva) May 17, 2023
“Fiscal consolidation is a central element of the programme” as is “preserving financial sector stability”. She said.
She further by saying, “monetary and exchange rate policies under the programme will focus on inflation control and rebuilding foreign exchange reserves”.
“An ambitious programme of structural reforms is being put in place to revitalise private sector-led growth by improving the business environment, governance, and productivity,” added Kristalina
The IMF welcomed the recent pledge of Ghana’s creditors, led by France and China, to begin talks for a debt restructuring by announcing on Friday that Ghana had offered enough guarantees to be eligible for an aid plan.
Weakened by the effects of the conflict in Ukraine, Ghana made the decision to turn to the IMF. In December, the two parties came to a pre-agreement under which Ghana would receive 3 billion dollars in loans over three years, subject to the completion of economic reforms.
Ghana, a significant producer of cocoa and gold, also has gas and oil reserves, but due to the Covid-19 outbreak and the conflict in Ukraine, its debt load has skyrocketed, as it has in other sub-Saharan African nations.
The greatest economic crisis in decades has compelled President Nana Akufo-Addo to change course and appeal to the IMF in order to avert the threat of default that some experts have highlighted.