The $300 million World Bank facility to support some projects in 2024 has finally hit the Bank of Ghana’s (BoG) account.
This was after Ghana met all the necessary conditions, including the cabinet and Parliament’s approval to aid the transfer of the funds to Ghana.
JoyBusiness understands that the transfer was done this morning March 27, 2024. The Bank of Ghana is expected to take “the dollars”, and transfer the cedi equivalent to the various government agencies and ministries leading those projects in the 2024 Budget.
The “Foreign Exchange” component of this facility could go a long way to support the international reserves of the Bank of Ghana. Data released by the Bank of Ghana showed that its International Reserves have hit more than $6 billion ending February.
The Finance Minister Dr. Mohammed Amin Adam at a recent engagement with the media this week noted that the Government is expecting about $1.2 billion from the country’s development partners before the end of this year.
Impact on the Economy
The disbursement will help fast-track some infrastructure projects outlined in the 2023 budget that were stalled due to the late disbursement of this support from Ghana’s donors.
The World Bank should have disbursed this facility late last year. However, delays on the part of Ghana to reach a deal with its bilateral creditors affected the approval of this $300 million loan.
The Transfers of this loan facility which has hit the Bank of Ghana’s account will go a long way to improve the Bank of Ghana’s reserve, which could go a long way to help in slowing the rate of the cedi’s depreciation. This is because it could give some signal to the international market that, the Central Bank is now in a better position to support the local currency.
Focus of this facility
The disbursement of this $300 million Development Policy Financing, the first in a series of three, three operations of $300 million each and part of a broad World Bank engagement for crisis response and resilience in Ghana. Its objectives are to:
1) restore fiscal sustainability;
2) support financial sector stability and private sector development;
3) improve energy sector financial discipline; and
4) strengthen social and climate resilience.
It is expected to strengthen domestic revenue mobilization, controlling expenditures, safeguarding financial sector stability, removing barriers to private investment, setting the energy sector on a sounder financial and operational footing, strengthening the country’s social protection system, and mainstreaming climate adaptation and mitigation across policies.
Background
This disbursement is part of the total financial support from Ghana’s donor as part of the IMF programme that the country secured in May 2023. The IMF has advanced some $1.2 billion to Ghana under the FUND programme.
According to the World Bank, the First Resilient Recovery Development Policy Financing is a critical contribution by the Bank’s International Development Association, which will help Ghana’s economic recovery and support the country’s resilient and inclusive growth.
The World Bank in January 2024, approved this facility, after an agreement in principle by the Official Creditors’ Committee under the G20 Common Framework on the key parameters of the proposed debt restructuring for Ghana.
The agreement, which is consistent with the Joint World Bank-International Monetary Fund Debt Sustainability Framework, represents a critical milestone toward restoring debt sustainability.
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