IMF approves $116.2 million credit facility for Ghana

30 Sep 2016
Financial Nigeria


The IMF’s total disbursement to Ghana under the Extended Credit Facility has reached $464.6 million.

Ghanaian President John Dramani Mahama

The International Monetary Fund has approved the disbursement of $116.2 million to Ghana after reviewing the country’s economic performance under its Extended Credit Facility (ECF) arrangement. With the latest disbursement, the IMF’s total disbursement to Ghana under the ECF programme has reached $464.6 million, according to a statement released on Thursday.
“Implementation of the ECF-supported programme by the Ghanaian authorities continues to be broadly satisfactory, but the economic outlook remains challenging,” said Tao Zhang, the IMF’s Deputy Managing Director. “There has been progress in stabilizing the macroeconomic situation and reducing financial imbalances, but fiscal risks remain elevated.”

Last year, Ghana began implementing a $1 billion three-year IMF programme designed to check the sliding cedi, rising inflation, and the country’s deteriorating public finances. Ghana’s debt to GDP ratio exceeded 70 percent in June last year after the country’ total public debt rose to $23.7 billion.

“The authorities are continuing their fiscal consolidation programme and aim to strengthen policy and reform implementation,” Zhang said. “Further efforts are needed to address revenue shortfalls, while expenditure control measures should be fully enforced to contain the wage bill and other current spending. The government is projected to run a primary surplus this year, which, along with the stability of the cedi, should contribute to a marked decline in the debt-to-GDP ratio.”

Earlier this month, the Bank of Ghana retained its benchmark interest rate at 26 percent – one of the highest rates in Sub-Saharan Africa – as the apex bank continues to battle rising inflation. The inflation rate – currently at 16.9 percent – has been above the BoG’s target rate of 8 to 10 percent for over three years.

“The Bank of Ghana should maintain a tight monetary policy stance to bring inflation back to target,” Zhang said. “Recent amendments to the BoG Act have introduced some improvements to central bank governance, but continued scope for central bank financing of the government and government influence on central bank operations remain significant shortcomings.”

Ghana faces a fiercely contested general election in December where voters will choose between incumbent President John Mahama of the National Democratic Congress and his main challenger, Nana Akufo-Addo, presidential candidate of the New Patriotic Party.

Other Photos/Videos