Ghana gets $3 billion IMF loan: Will it stick to its commitments?

Ghana gets 3 billion IMF loan Will it stick to its commitments

Kweku George Ricketts-Hagan, the Member of Parliament for Cape Coast South, has raised doubts about the government’s ability and willingness to implement the reforms and policies that are required for the $3 billion loan from the International Monetary Fund (IMF).

He said that the government lacked the commitment to seek the IMF’s assistance in the first place, and therefore he wondered if they would have the same commitment to follow through with what they have agreed to.

“The government urgently needed the IMF but they did not deserve it. The commitment to go to the IMF was not there,” the former Deputy Finance Minister said on TV3’s Key Points on Saturday, May 20.

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He added “The question is whether the government will find the commitment, determination and will to implement what they have signed up for?”

The IMF’s Executive Board approved Ghana’s request for a $3 billion bailout on Wednesday, May 17, to support the country’s economic recovery from a severe crisis that has been worsened by the COVID-19 pandemic and the Russian-Ukraine war.

The first tranche of $600 million was received by the Bank of Ghana (BoG) on Friday, May 19.

Speaking at a joint press conference with the IMF in Washington on Thursday, May 18, BoG Governor Dr Ernest Addison said “Just for your information we have had swift advisory today, [Thursday] to receive the money by tomorrow [Friday], 600 million US Dollar”

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Finance Minister Ken Ofori-Atta said that another $600 million would be released in six months, and then five more tranches of $350 million each every six months, subject to IMF reviews.

The IMF Mission Chief for Ghana Stéphane Roudet said that the $3 billion loan would lead to reforms in the energy and cocoa sectors, as well as boost private sector investments and foreign exchange reserves.

“There will be reforms in the energy and cocoa sectors,” he said during the joint press conference.

“It will be restoring macroeconomic stability, for higher and more inclusive growth. It has reforms that will make the economy more resilient and likely to withstand shock in the future,” he added.

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Finance Minister Ken Ofori-Atta thanked the IMF for its support.

He said “We are already seeing relative stability in the currency and inflation and revitalizing our economy. Government with support from the IMF and collective effort with Ghanaians will work through our current challenges and emerge stronger.”

Ghana is restructuring its debt under the Group of 20’s Common Framework, which aims to improve coordination between traditional creditors like the Paris Club and new ones like China. The framework is also being used by Zambia and Ethiopia to restructure their debts.

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