Ghana receives $370 million IMF funding despite economic challenges

The International Monetary Fund (IMF) has agreed in a principle with the government of Ghana for the fourth review of the country’s Extended Credit Facility (ECF) programme, enabling a US$370 million financial allocation immediately the IMF Executive Board gives final approval.

The agreement comes after a two-week mission in Accra by an IMF team under the dirce of Mission Chief Stéphane Roudet, and comes with the economy showing some life, regardless the delay in policy ahead of  the 2024 general elections.

Mr Roudet said in a statement released on 15 April that “IMF staff and the Ghanaian authorities have reached a staff-level agreement on the fourth review of Ghana’s economic program under the Extended Credit Facility arrangement,”

He added that “Upon completion of the Executive Board review, Ghana would have access to SDR 267.5 million (about US$370 million), bringing the total IMF financial support disbursed under the arrangement since May 2023 to about US$2.355 billion.”

As per the International Monetary Fund (IMF), Ghana exceeded growth expectations in 2024, which was supported by excellent performance in the mining and construction sectors. Some external conditions also showed substantial improvement, with strong gold exports, recorded higher remittance flows, and a strong-than-anticipated accumulation of foreign reserves.

However, these gains were mitigated by “marked deterioration” in overall project outcomes by the end of 2024. The fund stressed on the election-year revenue shortfalls, inflationary trends and delays in significant economic reforms and energy sectors.

Mr Roudet noted that “Preliminary fiscal data point to slippages in the run-up to the 2024 general elections, on account of a large accumulation of payables. Inflation exceeded programme targets. Several reforms and policy actions were delayed.”

As per the report, Ghana’s current administration has since taken “bold measures” to deal with the problems and get the programme back as planned.

These involves  the introduction of a 2025 budget aiming at a fiscal surplus of 1.5% of GDP, from a deficit of over 3%which recorded last year. Some significant public financial management reforms have also implemented to control spending

steps to address structural weaknesses in financial management and procurement framework while also reinforcing social protection for vulnerable citizens dealing with inflationary pressures.

He again said that “The authorities have enacted a 2025 budget that targets a 1½ per cent of GDP primary surplus and adopted several public financial management reforms. This includes an enhanced fiscal responsibility framework and new rules to tighten expenditure commitments.”

The IMF commended recent efforts by the Bank of Ghana to raise its policy rate, regarding the monetary policy tightening and the current fiscal consolidation as necessary to solve problems related to inflation.

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