Three reasons why Ghana is going to the IMF

The government of Ghana has through the Ministry of Finance, disclosed three reasons why the country has applied for an economic bailout from the International Monetary Fund (IMF).

The Ministry, in a 15-page document, explained that the Covid-19 pandemic and the Russian-Ukraine war have affected Ghana and impacted its economy negatively just like other countries.

The statement issued by the Minister said ”Ghana is seeking IMF support for three (3) main reasons:

i. Addressing policy challenges following the Covid-19 Pandemic and the Russian and Ukraine War. The confluence of shocks from the Covid-19 pandemic and the Russian-Ukraine War have complicated the conduct of public policy globally. They have resulted in rising debt and erosion of buffers, worsening financing conditions, high inflation, and exchange rate and BOP pressures especially for Emerging Markets and Frontier Economies. As is the case in key EMs and FMs, Ghana is seeking IMF support to back its Enhanced Domestic Programme which will seek to restore stability, help to contain the rising debt, and address the emerging BOP needs;

ii. Balance of payments support: Secondly, for concessional/cheaper financing to shore up international reserves, stabilize the cedi, continue smooth payments for imports (petroleum products, pharmaceuticals, medical equipment, among others) and restore conditions for strong economic growth (including support for government flagship programmes), while correcting underlying problems; and

iii. Catalytic effect: Providing catalytic effect of accessing additional financing from third parties (friendly sovereigns/commercial creditors), including resuming ICM market access sooner than later, facilitating credit rating upgrades.”


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