ACCRA, Ghana (AP) — The International Monetary Fund has agreed to give Ghana $3 billion to try 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.
The announcement this week say follows IMF officials’ two-week visit this month to Ghana’s capital Accra, where they discussed support for the country’s policy and reform plans with authorities. Ghana has been struggling with high public debt, rising inflation and a weakening currency.
At a press conference Tuesday, Finance Minister Ken Ofori-Atta said Ghana was “committed to the program and will work towards meeting the demands.” He said the agreement will help restore economic stability, tackle price spikes and strengthen the currency.
“The Ghanaian authorities have committed to a wide-ranging economic reform program, which builds on the government’s Post-COVID-19 Program for Economic Growth (PC-PEG) and tackles the deep challenges facing the country,” Stephane Roudet, IMF’s mission chief to Ghana, said in a statement Monday.
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 program 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 comes under a program 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.
The deal is a “crucial lifeline” and positive step, said Rukmini Sanyal, a Ghana analyst for the Economist Intelligence Unit, a research and analysis division of the Economist Group.
Inflation reached more than 40% in October, the highest it’s been since July 2001 and well above the central bank’s target of 6% to 10%, according to Trading Economics, which provides global economic statistics. Prices accelerated by some 5% for food and more than 10% for non-food items, the company said.
Public debt has jumped from more than 63% of economic output in 2019 to an estimated more than 100% this year, Sanyal said. The exchange rate also is under pressure and Ghana has lost access to international capital markets, provoking a drawdown in foreign exchange reserves, she 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.
Mednick reported from Dakar, Senegal.