Ghana’s currency, the Cedi, has soared against the US dollar in the past six months, beating about 150 other currencies tracked by Bloomberg’s currency tracker.
The Cedi’s impressive 33% rise since November reflects investor confidence in Ghana’s prospects of securing a US$3 billion bailout from the International Monetary Fund (IMF).
Ghana’s dollar bonds have also delivered strong returns of nearly 12%, well above the 3.6% average for emerging and frontier markets in a Bloomberg index.
Mohammed Amin Adam, Minister of State for Finance, said he was hopeful about the IMF board meeting on Wednesday, adding that the first US$600 million tranche would be released immediately after approval.
Another US$600 million would follow in November, and the rest of the funds would be disbursed in equal instalments of US$350 million every six months, subject to IMF reviews.
The Cedi’s recent rally has been driven by the positive outlook for the IMF deal, with some analysts predicting that it may trade below 10 against the US dollar.
Rand Merchant Bank’s African economist, Daniel Kavishe, said that similar market responses have been seen in countries that received IMF programs with immediate fund disbursements.
An IMF spokesperson confirmed the Wednesday board meeting, but declined to comment on specific amounts until after the meeting.
The expected funds will help boost Ghana’s foreign-exchange reserves, which have fallen by almost half since their peak in August 2021.
The central bank used reserves to support the Cedi after the country defaulted on its debt.
Ghana is using the G20’s Common Framework to restructure its debt as part of its efforts to secure the IMF program.
This framework aims to improve coordination between traditional sovereign creditors like the Paris Club and newer creditors such as China, the largest lender to emerging economies.
Zambia and Ethiopia are also using this framework to address their debt issues.