IMF congratulates Ghana for securing Bailout; Promises support for reforms implementation

Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva has expressed her delight and congratulated President Akufo-Addo on securing a bailout programme.

She announced the Fund’s readiness to support the government in implementing reforms to address the economic and financial crisis that has befell the country.

Mrs Georgieva disclosed this in her tweet on Wednesday, May 17, after the IMF Executive Board approved a $3 billion program for Ghana.

“Congratulations to President Nana Addo Dankwa Akufo-Addo and his team on the $3 billion IMF-supported program approved by our Executive Board.

“We stand with Ghana as it implements reforms to address the current economic and financial crisis and help build a better future for all Ghanaians,” she tweeted.

On Wednesday, May 17, the IMF finally approved Ghana’s Programme request seeking for a $3 billion Balance of Payment support to stabilise the economy.

According to the government, about $600 million would be disbursed to the country as the first tranche today, May 19.

The second tranche of disbursement would be expected by December 2023.

The $3 billion program aims to support Ghana’s economic reform program over the next three years. The program is designed to address the country’s fiscal and external imbalances, strengthen the financial sector, and promote inclusive growth.

Ghana has been facing economic challenges in recent years, including high public debt, a large fiscal deficit, and a widening current account deficit.

The COVID-19 pandemic and the Russia-Ukraine war have also had a significant impact on the economy, with a sharp contraction in growth and a decline in revenues.

On the back of this, the IMF has since proposed the scrapping of tax exemptions, adjustment of levies on fuel, and an increase in income tax as measures the government could implement to boost revenue mobilisation under its $3 billion support programme.

According to the IMF Boss, the programme is only the first step towards restoring Ghana’s economic stability.

“Today’s decision is also a major milestone for the G-20 common framework. The commitment by the Official Creditors Committee to help make Ghana’s debt sustainable was essential for the approval of the Funds program and it signals important progress.

“The decision our board has taken is the beginning of the work we will do together with the authorities of Ghana for the implementation of the programme for the benefit of the people of Ghana.”

However, the Ghana National Chamber of Commerce and Industry has expressed its displeasure with the suggestions raised by the IMF.

The CEO of the Chamber, Mark Badu-Aboagye said that businesses will experience worse struggles should the conditionalities made by the IMF be implemented.

“When you introduce externalities like taxes, like high-interest rates, like levies, then you go to the bottom line and you realize that all of them are making losses, which means that this component needs to be managed.

“And that is where my concern is because these conditionalities will or may worsen that aspect of support that we need to give to businesses,” he emphasised.

To this end, the IMF MD expressed her appreciation for the strong partnership between Ghana and the Fund and reiterated the IMF’s commitment to supporting the country in the years ahead.

“We look forward to continuing our strong partnership with Ghana in the years ahead, and to supporting the country as it works to build a stronger, more inclusive economy for all Ghanaians,” Georgieva said.