The International Monetary Fund (IMF) recently completed the second review of the Ghana Common Post COVID-19 Programme for Economic Growth, also known as the PC-PEG. This review opens the way to the payment of the third tranche, which is $360 million. We are disscusing about IMF Board approves Ghana’s 2nd review, $360m to hit BoG’s account soon.
We are disscusing about IMF Board approves Ghana’s 2nd review, $360m to hit BoG’s account soon:
Approval and Quantitative Performance
The approval by the IMF Executive Board makes it possible to immediately disburse SDR 269.1 million (approx. US $360 million). This means that the total disbursements of the arrangement to Ghana is approximately US $1.6 billion. They indicated that Ghana met all quantitative performance criteria for the second review and had made satisfactory progress in key structural reform indicators despite some slippage. Continuing to maintain macroeconomic policies’ adjustments and reforms remains vital, particularly in the upcoming electoral period.
Impact on Ghana’s Financial Stability
The IMF’s disbursement of $360 million to Ghana is good for its financial health. This will provide a boost in foreign exchange reserves in Ghana, enabling the country to mitigate the effects of external shocks and stabilize the local currency. The money can also be channeled for fiscal support, paying for budget shortfalls and other essential areas of development such as infrastructure, health, and education, among others.
Ghana can then set aside a portion for debt servicing to avoid default, which is terrible for the country and investors. It can increase capital expenditure and promote economic growth by fostering business and employment. It is crucial not to misuse the funds or allow inflation to take center stage since it requires prudent management. This disbursement from the IMF is a relief to Ghana’s books, but usage should be wisely undertaken.
Other countries benefiting from IMF support
The IMF plays an important role in channeling finance to low-income countries through several processes. The IMF always supervises the economic and fiscal policies of the LICs. Conversations with country officials are based on policy effects, reliability, and development. All members of the IMF are free to borrow non-concessional loans. The Poverty Reduction and Growth Trust (PRGT offers grants and cheap credits to LICs while the Extended Credit Facility (ECF) offers sustained engagement for the balance of payment issues.
Working capital financing for unpredictable events or policy changes. o Immediate balance of payment assistance. Non-financial support for policy recommendations. Poverty Reduction Strategies help in linking program policies to poverty reduction and growth objectives. All the lending facilities under the PRGT are concessional. Contractual terms such as maturity, grace period, and at present interest-free. RCF Financing interest rate permanently fixed at zero percent since the year 2015. The IMF’s commitment to LICs assists in averting balance of payments crises, encouraging economic growth and poverty reduction.
Specific conditions attached to this IMF disbursement
Fiscal deficits, inflation, and external balances are some of the key indicators that Ghana needs to fulfill. These criteria help to maintain economic accountability and sound financial management. Ghana, for its part, is heavily committed to a set of key structural transformations. These reforms seek to improve Economic Derivatives, Debt Indicators and Spread, and Inclusiveness. Comprehensive debt restructuring is a good area where Ghana has recorded some level of improvement.
Relations with creditors also comply with program specifications to include agreements with Eurobond holders. IMF recognizes a positive medium-term outlook but they flagged risks especially given upcoming general elections. Observance of these conditions facilitates efficiency in the use of the disbursement for the economic stability and transformation of Ghana.
Conclusion
The IMF particularly focuses on the domestic revenue mobilization, proper control of expenditure and management of arrears. There is a need to foster reforms for the development of the private sector in order to encourage inclusive growth and reduction of poverty. Such a development is welcomed by various business and industry stakeholders who are calling on the government to focus on; monetary stability, public debt, and a favorable business climate.
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