The International Monetary Fund (IMF) has agreed to a $3bn loan to Ghana to get the West African nation’s debt under control, restore financial stability and help people most at risk from rising prices and other economic problems.
Ghana is facing more than 40 percent inflation, growing debt and a sharp decline in its cedi currency since the start of the year.
IMF officials have been in the capital Accra this month, where they discussed support for the country’s policy and reform plans with authorities.
At a news conference on Tuesday, finance minister Ken Ofori-Atta said Ghana was “committed to the programme and will work towards meeting the demands”. He said the agreement will help restore economic stability, tackle price spikes and strengthen the currency.
IMF board approval of the proposed three-year loan is expected “early next year”, Ofori-Atta said.
“We pray that this will be the last [support needed]. That is why the programme will be that strong,” he said.
Stephane Roudet, IMF’s mission chief to Ghana, said in a statement on Monday: “The Ghanaian authorities have committed to a wide-ranging economic reform programme, which builds on the government’s Post-COVID-19 Programme for Economic Growth (PC-PEG) and tackles the deep challenges facing the country.”
Ghana’s reforms are focused on shoring up public finances while protecting the vulnerable, he said. The changes include creating a medium-term plan to bring in revenue, increasing tax compliance, making the country’s finances more transparent and improving how public industries are handled.
Ghana also announced it will restructure its debt and “committed to strengthening social safety nets, including reinforcing the existing targeted cash-transfer programme for vulnerable households and improving the coverage and efficiency of social spending”, Roudet said.
The goal is to restore economic stability and debt sustainability while laying the foundation for stronger growth, the IMF said.
IMF managers and board members still must approve the three-year agreement, which would come under a programme providing financial assistance to countries with balance-of-payments problems. Ghana’s partners and creditors also must acknowledge receiving financing assurances, the IMF statement said.
Inflation reached more than 40 percent in October, the highest it has been since July 2001 and well above the central bank’s target of 6 percent to 10 percent, according to Trading Economics, which provides global economic statistics. Prices accelerated by some 5 percent for food and more than 10 percent for non-food items, the company said.
The IMF says reducing inflation, boosting market confidence and making it easier for Ghana to withstand external shocks were priorities, with work from the Bank of Ghana on monetary policy and exchange rate flexibility and the government launching a domestic debt exchange.