Financial sector analysts have applauded government’s efforts at securing the approval of the $3 billion balance of payment extended credit facility from the International Monetary Fund (IMF).
The final approval was made during the Executive Board’s crunch meeting held on Wednesday, May 17, 2023, following Ghana’s official financing assurances from the Paris Club and other bilateral creditors.
There have been projections that the initial disbursement of US$600mwill bolster macroeconomic stability and shore up the value of the cedi.
Reacting to the approval, Economist with the University of Cape Coast, Professor John Gatsi said Ghana is on track to see some corrections in its balance of payment deficits.
“This is a welcoming news because the government now has support for its policies. Credibility will also be given to government fiscal policy measures because the IMF will monitor and ensure things are done well.”
“Government will also have some funding to correct the balance of payment process as part of efforts to restructure the economy,” he said.
Also, lecturer of Finance at the University of Ghana Business School, Prof. Godfred Bokpin also shares similar views.
“It’s good news for Ghana. It shows that the economy is taking a turn for macro-economic stability but may not call for celebration. It calls for a lot of work. The US$ 600 million will shore up our international reserves to stabilize the cedi. The positive sentiment around the IMF program itself will bring some stability”.
Despite the commendation, government has also been cautioned against fiscal indiscipline going forward as it is critical to the restoration of macro-economic stability.
“The temptation for government is that this IMF program is going to provide some fiscal space for which reason they will want to borrow more. That is a great temptation that government will want to avoid”, Prof. Gatsi said.
For Prof. Bokpin, government must be more prudent in its fiscal policy direction.
“Leadership must initiate the necessary steps to ensure that whatever gains we make from the IMF are made more sustainable. Without considerable wasteful expenditure cuts and the necessary structural productivity enhancement reforms, Ghana will return to its vomit right after the programme.”
The approval months after Ghana sought help from international lenders to provide financing assurances which is a pre-requisite for the IMF’s board to sign off the IMF programme for the country.
Government is expecting the disbursement of the first tranche of $600 million within a week. The second and final tranches will be expected in the subsequent months after a successful first reviews of the programme.
Meanwhile, the International Monetary Fund will hold a virtual press conference later today, May 18 to give further details on the outcome of the IMF Executive Board meeting on Ghana’s bailout request.
The International Monetary Fund (IMF) will also publish full details of Ghana’s Economic Recovery programme submitted to the Fund for a possible bailout request as well as the necessary conditions associated with, the programme, and an IMF Staff report.