IMF-Ghana talks begin

An International Monetary Fund team, led by Mission Chief for Ghana, Stéphane Roudet, has commenced talks with Ghanaian authorities regarding policies and reforms that could potentially be supported by an IMF lending arrangement. Joining CNBC Africa to delve into the prospects of this two-week visit is Alex Boahen. The primary focus of the discussions during this meeting will revolve around conducting a debt sustainability assessment and evaluating the Ghanaian economy's current state. The IMF will scrutinize Ghana's fiscal consolidation plan to ensure that borrowing is minimized and debts remain sustainable. Without meeting these critical benchmarks, Ghana may not qualify for the IMF program it seeks, which entails an extended credit facility of approximately three billion dollars. A fundamental issue that the IMF will closely examine is how the government intends to reduce deficits. Additionally, the composition of the national debt, including the potential incorporation of borrowings through state-owned entities, will be under the IMF's microscope. Should these entities' debts be comprehended in the overall debt calculation, Ghana's debt-to-GDP ratio may surge from its current levels, posing challenges for debt sustainability. Reports indicate a possible restructuring of domestic debt, but caution is advised due to the fragile state of Ghana's banking sector, which recently underwent significant stabilization efforts. With banks heavily invested in government securities, the question arises as to who will bear the costs of this restructuring. The IMF managing director, Kristalina Georgieva, hinted at a probable release of the anticipated three billion dollar fund towards the end of the year, subject to the outcome of the debt sustainability analysis and negotiations with Ghana. Boahen emphasized that securing the fund hinges on Ghana's ability to convince the IMF of its fiscal consolidation efforts and ensure debt sustainability. The journey towards obtaining the IMF's support is far from guaranteed and necessitates thorough groundwork by the Ghanaian government.