Ghana looks to unlock 3rd tranche as IMF Board visits Accra

Ghana is on the verge of unlocking the third tranche of the International Monetary Fund (IMF) bailout program as a team from the IMF conducts a second review in Accra. This review is crucial as it will determine the disbursement of the next installment of the $3 billion bailout program. Earlier this year, in January, the IMF board approved the first review, allowing Ghana to receive $600 million in financial support. The team from the IMF will be in Ghana for the next two weeks to scrutinize the government's economic recovery measures and assess the progress made since the last review. Kweku Koomson, an Economic Analyst at Databank, provided insights into the ongoing developments in a recent interview with CNBC Africa. The key theme of the discussion revolved around the progress made towards meeting the IMF's benchmarks and performance criteria. Koomson highlighted that the successful completion of the first review was contingent upon meeting certain credit tests, both bilateral and commercial. Negotiations with international bond holders were also a crucial part of the process. While there has been optimism from the ministry about being on track with the program, there is a need for more transparency and communication regarding the progress achieved thus far. One of the critical points discussed was the utilization of previous tranches released by the IMF, particularly in addressing energy sector debts. Koomson noted that a significant portion of the funds from the last tranche was used to settle energy debts, which had contributed to pressure on the Ghanaian Cedi (GHS). The upcoming tranche is expected to continue supporting budgetary needs and help bolster external buffers. The central bank may utilize the funds to intervene in the market strategically to prevent inflationary pressures. In terms of structural reforms, Koomson pointed out that efforts had been made on the fiscal control front, leading to better-than-expected fiscal deficits. Interest savings and expenditure rationalization were cited as factors contributing to this improvement. The impact of these reforms was evident in the market sentiment, with the purchasing managers index reflecting a more optimistic outlook among businesses. The resurgence of consumer demand and purchasing orders signaled progress in the economy's recovery. The IMF team's visit to Accra signifies a period of intense scrutiny on Ghana's economic recovery efforts and structural reforms. The meticulous assessment conducted by the IMF will play a vital role in determining Ghana's eligibility for the third tranche of financial assistance. The government's commitment to meeting the IMF's criteria and implementing necessary reforms will be critical in securing continued support and stabilizing the economy. As Ghana navigates the challenges posed by the ongoing pandemic and strives towards economic recovery, cooperation with international partners like the IMF remains essential. The successful completion of the second review and the subsequent disbursement of funds from the third tranche will provide much-needed financial support to bolster Ghana's economy and pave the way for sustainable growth and development.