Recovery efforts for the economy have been cemented, with the country reaching a staff-level agreement (SLA) with the International Monetary Fund (IMF) as part of its Extended Credit Facility (ECF) programme’s third review.
Announced on October 4, this year (2024), the agreement is expected to unlock US$360million in financing – pending approval from the IMF Executive Board next December. This new tranche will bring total disbursement under the programme to US$1.92billion since its inception in May 2023.
This follows an intensive two-week review by an IMF mission led by Stephane Roudet, the Fund’s Mission Chief for Ghana. Mr. Roudet acknowledged the country has met all its quantitative targets for June 2024 and made steady progress on key structural reforms.
He however highlighted that the agreement is subject to IMF Management and Executive Board approval, after which Ghana will gain access to the next tranche of funds under the ECF programme.
Indeed, the country’s economic recovery continues to surpass expectations. Real gross domestic product (GDP) growth reached 5.8 percent in the first half of 2024, driven primarily by growth in the mining, construction and information & communication sectors.
The growth rate has far exceeded government’s initial annual target of 3.1 percent. The IMF Mission Chief echoed this sentiment, saying: “Economic growth in the first half of 2024 was much higher than initially envisaged, with a broadening of growth sources across sectors during the second quarter”.
This notwithstanding, the IMF notes that recent challenges – such as a dry spell in the northern regions – may impact agricultural output and food prices for the rest of the year.
Roudet has expressed optimism that government’s policy response will mitigate these risks, adding that the Bank of Ghana’s tight monetary policy stance should support the continued decline in inflation – which stood at 21.5 percent in September, down from 54 percent in December 2022.
Coupled with the above, the country successfully completed a Eurobond debt exchange that received a 98 percent consent rate from bondholders. This is expected to reduce the total debt stock by US$5billion and provide substantial debt service relief between 2023 and 2026.
Also, Ghana has restructured more than 90 percent of its eligible external debt, following a Memorandum of Understanding reached with the Official Creditors Committee (OCC) under the G20 Common Framework in June.
This progress in debt restructuring is seen as crucial to creating fiscal space for growth-enhancing investments and social programmes.
