IMF endorses bailout for Ghana: Ghana has finally secured clearance from the International Monetary Fund (IMF) Executive Board for a three-year budget support plan designed to restore economic stability and debt management after 10 months of deliberations and negotiations.
The government will receive $3 billion through the extended credit facility (ECF), which is also anticipated to promote structural changes and aid in the resuscitation of the economy after two years of difficulties.
After the Executive Board’s agreement, Kristalina Georgieva, the IMF’s managing director, said in a statement that the decision “would permit an immediate release to Ghana amounting to SDR 451.4 million (about $600 million)”.
According to the announcement, the program would also assist Ghana in overcoming immediate policy and financial challenges, including by acting as a catalyst to attract outside funding from development partners and by offering a framework for the successful conclusion of the ongoing debt restructuring. “A key component of the agenda is fiscal consolidation.
Beginning with the 2023 budget, there will be a significant and immediate fiscal adjustment. In the medium term, additional spending on social programs and development will be possible thanks to increased revenue and reduced spending, as well as initiatives to safeguard vulnerable households, the statement said.
Since last week, a group led by the minister of finance, Ken Ofori-Atta, and the governor of the Bank of Ghana has been in Washington, D.C., with the goal of presenting the proposal for approval.
The business and investor community reacted favorably to this ratification and expressed optimism for stability and modest growth over the next years.
The Post-COVID-19 Programme for Economic Growth (PC-PEG), which is the government’s plan to address economic challenges, restore macroeconomic stability, reduce debt to levels that can be sustained over the medium term, support structural reforms, foster growth, and ensure the protection of the poor and vulnerable, is a pillar of the IMF’s program.
Restoring fiscal sustainability and reducing fiscal risks, such as those associated with contingent obligations from state-owned companies, are some of the PC-PEG’s goals.
Additionally, it is anticipated to enhance the currency rate regime, achieve low and steady inflation, rebuild investor confidence, regain market access, and open up new avenues for financing.
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