Grants not enough for financing needs

WASHINGTON, June 21 - Ghana is not yet ready to turn away from loans for its development needs, because the West African country lacks sufficient access to grants, a top International Monetary Fund official said on Tuesday. Takatoshi Kato, the IMF's deputy managing director, said Ghana has benefited from recent debt relief but noted a dearth of grants available to the country, making it likely it would keep borrowing for some time to come.

"Ghana's long-term debt-sustainability is vulnerable ... to a significant reduction in grants as a source of financing," Kato said in a statement.

"Until conditions are more favorable and a longer track record of good macroeconomic performance is established, Ghana should continue to rely on concessional borrowing to finance development," he said.

The IMF on Tuesday completed a regular review of Ghana's $271.3 million low-cost lending program with the fund, and approved a disbursement of $38.7 million to the country.

It also agreed to extend Ghana's current program with the fund by six months, until October 2006.