- as Ghana completes ECF’s final review
In the coming weeks, Ghana’s external reserves will see a significant increase following the completion of the last review of the Extended Credit Facility (ECF) programme by the International Monetary Fund’s (IMF) Executive Board. The review produced an enthused endorsement from the Executive Board.
This will allow the disbursement of the last tranche of SDR 132.84 million (about US$ 185.2 million) of the US$926 million in balance of payments support to the country, which should further shore up the country’s external reserves.
The ECF arrangement was expected to provide sustained program engagement over the medium to long term aimed at resolving Ghana’s protracted balance of payments (BoP) problems.
Aside the IMF’s fund inflow, the government expects some other fresh injections of capital from abroad such as US$750 million in bridging finance from Standard Bank and Standard Chartered Bank as well as some US$300 million from COCOBOD, borrowed for cocoa purchases from farmers during the minor crop season and proceeds from the US$3 billion Eurobond itself.
However, the Board advises that the country needs to rebuild its international reserve buffers, through careful foreign exchange liquidity management, which remains critical to support greater resilience against external shocks.
Considering government’s resolve to tackle difficult reforms, the Executive Board also approved the authorities’ request for a waiver of the non-observance of a few program targets.
Ghana’s three-year arrangement was approved on April 3, 2015 for about US$925.9 million. This was extended for an additional year on August 30, 2017 and is to end on April 2, 2019.
The arrangement aimed to restore debt sustainability and macroeconomic stability in the country to foster a return to high growth and job creation, while protecting social spending.
Following discussion by the Board, Mr. Tao Zhang, Deputy Managing Director and Acting Chair said, “the authorities have achieved significant macroeconomic gains over the course of the ECF-supported program, with rising growth, single digit inflation, fiscal consolidation, and banking sector clean-up. Continued macroeconomic adjustment should underpin these improvements, as the 2020 elections approach.”
The Board noted the need for progress on structural reforms to be intensified, as plans to monitor fiscal operations, including for SOEs, will help mitigate fiscal risks.
By Joshua W. Amlanu