Addressing the press, the Director of African Regional Department at the IMF, Abebe Aemro Selassie said it is really important for Ghana to implement the programme fully.

He however pointed out that the Fund will continue to support Ghana, consistent with the programme implementation. 

“What I can say is that going forward would be really really important that Ghana continues to implement the programme that they have developed as envisaged. That is really critical”.

“These programmes are designed to be implemented over three, four years. And it is important that you stick…Ghana’s sticks the course and see the programme being implemented over the next three years. So, we look forward to continuing to support Ghana, consistent with program implementation”, he explained.

He pointed out that the official creditors have signalled to provide debt relief, consistent with what Ghana needs.

This he assured his outfit support for Ghana to prevent the debt restructuring with external creditors from dragging as a result of the ‘push for equal terms’ by the creditors.

The government is currently working to reach a final deal with bilateral and commercial creditors on the debt restructuring. However, there are fears the ‘push for equal terms’ for all categories of creditors could drag the process and hurt Ghana’s programme and the economy.

Ghana has so far received $1.2 billion as bailout package from the IMF for the three year programme.

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“Pending completion of the debt restructuring, the attached Debt Sustainability Analysis (DSA) continues to show large and protracted breaches to the standard thresholds”, the IMF mentioned.

Given the ongoing debt restructuring and the large protracted breaches to the DSA thresholds, the Fund said Ghana remains in debt distress as the DSA shows that the debt is unsustainable and unchanged from the one published in May 2023.

A team from the IMF on October 6, 2023, held a meeting with the Government of Ghana on policies underpinning the IMF arrangement under the Extended Credit Facility (ECF) programme.

Background

In 2023, the government began a programme to restructure Ghana’s debt as part of measures to bring it to sustainable levels. This was a criteria to secure the IMF programme.

The authorities’ comprehensive debt restructuring strategy was aimed to restore a “moderate” risk of debt distress under the IMF-WB Debt Sustainability Framework for low-income countries (LIC-DSF).

The restructuring also targeterd external debt service relief during the programme from the period (2023-2026) to help close the external financing gap and the domestic debt restructuring was designed to reduce domestic financing pressures significantly.

Ghana’s Debt Sustainability Analysis

The IMF added that the macroeconomic framework underpins the Debt Sustaining Analysis and the staff baseline scenario is based on the macroeconomic trajectory envisaged under the Fund-supported programme aimed to restore macroeconomic stability and debt sustainability in the medium term.

Ghana’s fiscal and external positions deteriorated significantly in the wake of the Covid-19 pandemic, the tightening in global financial conditions and the war in Ukraine.

These external shocks, combined with pre-existing fiscal and debt vulnerabilities, the Fund said pushed public and external debt up. To this end, Ghana lost international market access in late 2021, and the macroeconomic situation became more challenging in 2022, with large losses in

According to the Fund, the large fiscal deficits and the economic slowdown in the wake of the pandemic led to an increase in public debt from 63.0% of Gross Domestic Product (GDP) in 2019 to 93.3% of GDP at the end of 2022.

Domestic debt also reached 50% of GDP in 2022, of which 16.0% of GDP was held by the Bank of Ghana, while public external debt stood at 43.3% of GDP.

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