Ghana is seeking credit facilities from three multilateral lenders – International Monetary Fund (IMF), World Bank and the African Development Bank (AfDB) to support its ailing economy following the ongoing war in Ukraine and economic shocks caused by the coronavirus pandemic.
The country expects the IMF to approve a first loan tranche of $600 million as soon as Wednesday, paving the way for disbursement within a week, Minister of State in the Finance Ministry Mohammed Amin Adam told Reuters on Sunday.
Ghana is seeking $3 billion from the Fund to shore up its battered economy. On Friday, IMF Managing Director Kristalina Georgieva said Ghana’s official creditors had provided the necessary financing assurances for the IMF Executive Board to look at signing off on the loan.
“We expect a deal on Wednesday. With the disbursement, there is going to be $600 million as a first tranche just immediately after the approval,” Adam said by phone, adding that Ghana hoped to receive the funds within a week of the board’s decision.
He said a second tranche of $600 million is expected to be approved after a successful first review of the programme, sometime in November or December, with the rest disbursed in equal tranches of $360 million after semi-annual reviews.
The IMF funds will boost Ghana’s coffers and help it work towards the target of foreign reserves amounting to the equivalent of three months of imports by 2026, he said.
Like some other smaller, riskier emerging markets including Sri Lanka and Zambia, Ghana faces a debt overhaul after its already strained finances buckled under the economic fallout from COVID-19 and Russia’s invasion of Ukraine.
Some $5.4 billion of debt to official creditors has been earmarked for restructuring, according to government data, as well as $14.6 billion of debt to private overseas creditors.
Ghana has also turned to the World Bank as it fights to restore macroeconomic stability and end its worst economic crisis in a generation that has fuelled protests over the soaring cost of living.
Adam said the government was far along in talks with the World Bank to provide additional support of $900 million to be disbursed in three equal instalments of $300 million over three years.
“We are far advanced, almost concluding negotiations,” he said.
The World Bank has also agreed to support a financial sector stability fund with $250 million to help Ghana address the insolvency and liquidity challenges following a domestic debt exchange programme, which has affected some domestic banks.
Adam said the government was also in talks with the African Development Bank for over $100 million for the stability fund.