Ghana revises IMF funding target, asks for $3 billion over three years - Bloomberg

Ofori Atta22 Finance Minister, Ken Ofori-Atta

Tue, 9 Aug 2022 Source: www.ghanaweb.com

The government will be looking at receiving an amount of $3 billion over three years from the International Monetary Fund (IMF) once an agreement on a programme is reached.

This is according to international news agency, Bloomberg.

The portal reported on its website that the new amount requested as a loan was double the government’s initial target of $1.5 billion.

“Ghana’s government is in talks over a loan of about $3 billion from the International Monetary Fund, according to two people familiar with the matter.

“The amount is double what the West African nation was considering a month ago as it tries to shore up its finances and win back access to global markets. The funding would be provided over three years, the people said, asking not to be identified because the talks are still in progress and public announcements have not been made. Calls to a finance ministry spokeswoman didn’t connect,” Bloomberg added.

An IMF emailed response to the news outlet also indicated that it was to early to comment on the subject, maintaining that the Executive Board of the Bretton Woods institution ultimately wielded power in determining the programme for Ghana.

“Since negotiations for the program are starting now, it’s too early to comment on the final form the program will take.

“The Extended Credit Facility for low-income countries is the Fund’s main tool for medium-term support for countries facing protracted balance of payments problems, similar to Ghana’s. The duration of such an arrangement is between three to four years, and extendable to five years. The final program is ultimately decided by the IMF’s Executive Board,” an IMF spokeswoman told Bloomberg.

It will be recalled that the government on July 1 made a U-turn on its strong position of not seeking support from IMF amid an economic downturn.

A team from the IMF arrived in the country on July 6 and engaged Ghanaian authorities for a programme aimed at restoring macroeconomic stability and safeguarding debt sustainability among many others.

Government has continuously maintained that it will negotiate a good deal with IMF.

On Friday, August 5, American credit rating agency, Standard and Poor's (S&P) Global Ratings pushed Ghana's debt further into speculative territory, lowering its foreign and local currency sovereign ratings to CCC+/C from B-/B.

According to a report by marketwatch.com, S&P said its outlook for the country remains negative, "reflecting Ghana's limited commercial financing options, and constrained external and fiscal buffers."

S&P which is one of the ‘Big Three’ credit-rating agencies, including Moody's Investors Service and Fitch Ratings, in their report stated that the “Covid-19 pandemic and the conflict in Russia have magnified Ghana's fiscal and external imbalances.”

"There is also demand for foreign currency that has been driven higher by several factors, including nonresident outflows from domestic government bond markets, dividend payments to foreign investors and higher costs for refined petroleum products," the report added.

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Source: www.ghanaweb.com
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