The International Monetary Fund (IMF) has given its nod to Ghana’s request for a $3 billion bailout package, providing a significant boost to the nation’s economic recovery efforts amidst a debt crisis. This long-awaited approval has instilled confidence in investors, leading to Ghana’s currency, the Cedi, emerging as the world’s top-performing currency against the US dollar.
Bloomberg reports that the IMF’s approval of the bailout package comes as welcome news for Ghana, which has been grappling with a debt-induced crisis. The anticipation of this decision over the past six months has generated optimism among investors and triggered a surge in confidence, resulting in the Cedi’s remarkable performance against the dollar.
As of the latest reports, the Cedi traded 1.7% stronger at 10.8625 per dollar in Accra, the capital of Ghana. Additionally, Ghana’s Eurobond maturing in 2032 experienced a positive upswing, rising 0.5 cents to 40.2 cents on the dollar.
The approved funding will play a crucial role in replenishing Ghana’s foreign-exchange reserves, which have witnessed a significant decline of nearly 50% since reaching their peak in August 2021. This decline can be attributed to the central bank’s efforts to defend the value of the Cedi.
To secure the approval of the IMF program, Ghana had to make tough economic decisions, including implementing tax increases. The successful restructuring of Ghana’s debt under the G20’s Common Framework, facilitated by a bilateral creditors group co-chaired by China and France, also played a pivotal role in influencing the IMF’s decision.
While the IMF has yet to make an official announcement regarding its approval, sources close to the matter have confirmed Bloomberg that the approval was granted following a meeting of the IMF’s executive board on Wednesday. Mohammed Amin Adam, the Minister of State for Finance, has stated that the government expects to receive an initial disbursement of $600 million this week, with another $600 million anticipated in November. The remaining amount will likely be disbursed in equal installments of $350 million every six months, subject to regular IMF reviews.
In addition to the IMF bailout, the Ghanaian government is actively engaged in negotiations for an additional $900 million in budget support from the World Bank over a three-year period. Simultaneously, discussions are being planned with eurobond holders to restructure the $13 billion debt owed to private investors. These comprehensive efforts underline Ghana’s commitment to stabilizing its financial situation and paving the way for sustained economic growth.