The approval by the IMF board for Ghana’s first review is positive news for the economy

By Majesty 5 Min Read
Professor Godfred Bokpin On IMF Review

Godfred Bokpin, a professor in the University of Ghana’s Department of Economics, believes that the board’s approval of the first assessment of Ghana’s programme with the International Monetary Fund (IMF) is encouraging for the country’s economy.

Given that the endorsement process takes a while, he characterised the approval as good news.

It’s good news, according to Professor Bokpin. Recall that for the last three months, the 32 million people living in Ghana have done nothing except wait for an economy valued at over $70 billion to be supported by $600 million from the IMF and then roughly $550 million from the World Bank. Thus, insofar as the board had convened and given its approval for the initial review,

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“Remember that Ghana had a difficult journey and that receiving support now is becoming very expensive; it took us a lot of negotiations just to get the programme approved in the first place.”

The Fund’s Executive Board authorised Ghana’s second tranche, worth US$600 million, for instant distribution.

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With the loan facility approved, the nation has now received US$1.2 billion in funding to implement the Post COVID-19 Programme for Economic Growth (PC-PEG), which is sponsored by the IMF.

This happens roughly a week after the nation successfully negotiated a deal with the Official Creditor Committee, which allowed the Fund to approve the nation’s First Review of the three-year US$3 billion plan.

Finance Minister Ken Ofori-Atta referred to the achievement as a “pivotal milestone” in the country’s plan implementation during a joint news briefing with the IMF.

Actually, the settlement with the official creditors is a strong endorsement of our economic plan. The benefits obtained thus far from the PC-PEG implementation supported by the IMF have been noteworthy, he stated.

He went on, saying, “As a result, this endorsement has unlocked an IMF disbursement of US$600 million and will pave the way for an additional US$300 million from the World Bank by the end of February under the Development Policy Operation Financing.”

Mr. Ofori-Atta also expressed anticipation for the World Bank’s approval of US$250 million to bolster the Ghana Financial Stability Fund, emphasizing the substantial support it would provide for the ongoing economic recovery efforts. 

He pledged a commitment to robust structural reforms in areas such as tax policy, public financial management, and the financial, energy, and cocoa sectors, aligning with the goal of fiscal consolidation and economic growth.

Dr. Ernest Addison, the Governor of the Bank of Ghana, highlighted the government’s dedication to implementing sound policies throughout 2024 to further ease inflation.

This commitment is firmly grounded in Ghana’s objective of achieving single-digit inflation. Dr. Addison emphasized the Bank of Ghana’s vigilance in monitoring both domestic and external developments to sustain the downward trajectory of inflation without compromising growth.

Despite acknowledging the challenges ahead, Dr. Addison expressed confidence in the ongoing economic recovery process. He underscored the importance of executing essential structural reforms to enhance the economy’s functionality and ensure long-term sustainability.

Mr. Stephane Roudet, IMF Mission Chief for Ghana, announced that the approved US$600 million would swiftly disburse to the Bank of Ghana’s accounts. 

Despite the challenging economic environment, he noted that the Ghanaian Authorities’ implemented reforms were yielding positive results, with signs of economic stabilization evident. While acknowledging the resilience of the Ghanaian economy, Mr. Roudet emphasized that the road to full stabilization would be a gradual process.

Encouraging the government to address outstanding challenges, including reaching a commercial creditors agreement, Mr. Roudet stressed the importance of determined and steadfast policies and reform implementation for sustained progress.

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