IMF open to renegotiating Ghana's $3 billion financing program if reforms aren't derailed

The International Monetary Fund is open to renegotiating Ghana’s $3 billion financing program with the incoming administration provided accompanying reforms aren’t jeopardized.

“IMF-supported programs are developed collaboratively with each country’s authorities,” a spokesperson for the Washington-based lender said in response to emailed questions. “Any changes must ensure that the economic objectives of the reform programs remain achievable.”

The IMF’s primary focus under the current extended-credit facility is to support Ghana in restoring macroeconomic stability and ensuring debt sustainability, while fostering long-lasting and inclusive growth, the spokesperson added.

Ghana embarked on a debt-restructuring and sought IMF help when it could no longer service its loans. State debt ballooned to almost 100% of gross domestic product by the end of 2022.

The debt crisis fanned inflation, which reached 54.1% two years ago before declining to 23% at the end of November. The nation’s currency, the cedi, has depreciated about 60% in the last four years, and the central bank increased interest rates to a two decade-high of 30% before lowering it to 27%.

Under the IMF program, which began in May 2023, the government must achieve a primary budget surplus of 0.5% of gross domestic product by the end of this year. It also needs to achieve a debt-to-GDP ratio of 55% by 2028.

John Dramani Mahama, who won presidential elections last weekend to reclaim a post he last held eight years ago, has said he intends renegotiating the IMF package to smooth out the repayment of restructured loans and reduce the tax burden on corporates. He’s also pledged to prioritize stability over economic growth after he takes office on Jan. 7.

“We do not expect the NDC to walk away from the current IMF programme,” Barclays Plc said in a note to clients. “It seems reasonable to expect a renegotiation to help align the NDC’s economic preferences and tactical macro signaling with the program.”

Mahama beat Vice President Mahamudu Bawumia in the election, winning 56.6% of the vote. His margin of victory was the biggest in two decades and illustrated the public anger over soaring living costs and President Nana Akufo-Addo’s management of the debt crunch.

Watch the latest edition of BizTech below:



Click here to follow the GhanaWeb Business WhatsApp channel