Ghana risks shortage of foreign exchange if IMF deal is not secured - Joe Jackson

Financial Analyst, Joe Jackson has shared the possible consequences that Ghana could face if the country’s fails to urgently secure an IMF-supported programme for an Extended Credit Facility.

According to him, the country risks facing a shortage of its Foreign Exchange reserves should the country miss out on securing the US$3 billion financial bailout from the Fund.

In a tweet posted on Twitter, the Director of Financial Services at Dalex Finance said Ghana's Gross International Reserves (GIR) dropped from $9.8 billion in Jan 2022 to US$5.9 billion in February 2023.

While providing some data to back the potential shortage, Joe Jackson noted the decline represents only 2.8 months of import cover adding that the minimum should be three months of imports cover.

The Government of Ghana had earlier expected to secure a Board Level approval from the IMF but failed to do as the country did not feature in the schedule of meetings for the IMF Board for the rest of March 2023.

Minister of Finance, Ken Ofori-Atta, in February this year had warned of the consequences of Ghana not making significant progress in the $3 billion bailout it is seeking from the IMF by the end of March 2023.

According to him, if the government does not go to the fund with something concrete by March, the economic meltdown seen in 2022 might be seen again.

But that timeline has since been revised after Ghana only recently completed its prior actions required to reach a Board-Level approval with the Fund after recent meetings were held at this year's IMF/World Bank Spring Meetings in Washington DC-USA.

Ghana secured staff-level agreement (SLA) for the $3 billion request in December 2022 but efforts to move pass the final lap have dragged as bilateral creditors haggle over the terms for an external debt restructuring exercise.

Ghana now hopes to reach a Board-Level approval from the IMF in May 2023.

See the tweet from Joe Jackson:

Ghana may face Foreign Exchange shortages if we fail to lock in the IMF bailout.

Ghana's Gross International Reserves (GIR) dropped from $9.8B in Jan '22 to $5.9 in Feb '23.

This is only 2.8 months of imports. The minimum should be 3 months' imports.#BrokeGhana #IMFBailout pic.twitter.com/cAEOCErl64

— Joe Jackson (@Joe_Jackson_GH) April 21, 2023