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Debt service to IMF may hinder Ghana’s entry into capital market - Report

IMF New International Monetary Fund

Thu, 25 May 2023 Source:

Ghana’s hopes of regaining access to the international market may not exactly happen as soon as possible due to its debt obligations to the International Monetary Fund (IMF) by the end of the economic recovery programme.

The IMF in its country report on Ghana spelled out the fact that the country must ensure that it rebuilds market confidence in its policies through stringent fiscal discipline.

Parts of the report noted that: “high prospective debt service to the Fund after the end of the programme may itself make it more difficult to regain market access.

"Strong programme commitment and ownership by the authorities and continuous engagement with them and their advisors before and following the programme approval could help mitigate these risks.”

Also, the Fund posited that Ghana’s capacity to repay its $3 billion Extended Credit Facility is adequate—assuming successful programme and debt restructuring implementation and provided adequate market access is eventually restored.

Even though its capacity is subject to substantial downside risks, “several capacity-to-repay indicators are consistently above the top quartile of past Upper Credit Tranche (UCT)-quality arrangements for PRGT programmes.”

“Outstanding credit is projected to peak at 5.3% of Gross Domestic Product (407% of quota) in 2026, and then gradually converge towards the top quartile of past Poverty Reduction and Growth Trust (PRGT) arrangements over the next 10 years. Capacity to repay is further constrained by Ghana’s low level of reserves,” it said.

Meanwhile, speaking at the Qatar-Africa Economic Forum in Doha, President Nana Addo Dankwa Akufo-Addo said Ghana is currently not in a rush to enter the international capital market but will position itself to take advantage of global savings.

The president said “We have positioned ourselves to be able to go back into the International market which had been a source of funding for us during the first three or four years of our government,” the president said.

Adding, “There is no rush but obviously why not take advantage of global savings, it makes a lot of sense to me. We will try as much as possible to maintain the discipline which is required and the most important requisite for a successful programme.”


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