The first tranche of IMF funding is expected to go into government functions according to Ghana’s Ministry of Finance. Speaking during a press briefing by the IMF on Ghana, Finance Minister Ken Ofori Atta says following liquidity challenges the government has experienced over the past 6 months, the first batch of financing will go into funding budget deficit and ensuring swift and effective dispensation of government services.
The funding is part of the 3-billion-dollar package that Ghana secured from the IMF over a three-year period. Ghana secured financial assurances from the Paris Club of lenders this month and shortly after, the IMF board approved the bailout package.
The government says the economy will begin rebounding after receiving news of the approval. Speaking to the press, Dr. Tiah Kabiru Mahama, Technical advisor, office of the vice president, projects that the local currency will gain mileage against the dollar due to reduced dollar demand. Further, Dr. Mahama also deducts a fall in imported inflation thus easing the financial burden on many families. The funding is expected to unlock foreign direct investment as investors perceive the bailout as a vote of confidence for the Ghanaian market by the IMF.
However, optimism does not cut across the board. Dr. Mohammed Amin Adam, minister of State at the Ministry of Finance says it will take time before all citizens can feel the impact of the bailout. Dr. Mohammed says pensioners who have been protesting for their dues will have to wait longer as the government deliberates on principal payment. However, he notes that coupon payment is already underway.
IMF Managing Director Kristalina Georgieva has congratulated Ghana on securing the funding. While acknowledging the impact that external global shocks such as Covid 19 and the Russian invasion have had on the Ghanaian economy, Kristalina also points to fiscal indiscipline and over-borrowing by the current administration.
“Fiscal consolidation is a core element of the program. A substantial and front-loaded fiscal adjustment has started with the 2023 budget. Enhanced revenue and streamlined expenditure will be combined with policies to protect vulnerable households and create room for higher social and development spending in the medium term. With a view to fostering lasting fiscal discipline, the authorities are also advancing reforms to enhance domestic revenue mobilization, strengthen public financial management, and tackle the profound challenges in the energy and cocoa sectors. The government has also launched a comprehensive debt restructuring, including domestic and external debt, to place debt on a sustainable path. Effective collaboration by all parties involved would be critical.”