President Nana Addo Dankwa Akufo-Addo has requested the support of Japan to help Ghana secure an agreement with the International Monetary Fund (IMF) Board for a $3 billion balance of payment support.
According to the President, Japan, as a member of the Paris Club, has a major role to play in helping Ghana secure the IMF deal.
During a meeting with the Japanese Prime Minister, Fumio Kishida, who made a stopover at the Jubilee House on Tuesday evening, President Akufo-Addo also stated that Ghana is counting on the support of Japan to reach a favorable agreement with the IMF. This will pave the way for a robust recovery of Ghana’s economy.
Ghana requested a three-year, $3bn extended credit facility (ECF) from the IMF in July 2022, and an arrangement was agreed upon in December 2022. The aim of this facility is to restore credibility among investors, build reserve buffers, and improve fiscal and debt sustainability. However, debt restructuring needs to be agreed upon with Ghana’s external creditors before the IMF’s Executive Board can sign off on the ECF.
The Economic Intelligence Unit (EIU) in its 2023 Country Report on Ghana anticipates Ghana to secure restructuring agreements on its public external debt during 2023-24, involving official and private creditors alike. It notes that, given the country’s pressing macroeconomic crisis, “the conclusion of a domestic debt-swap operation in February and increasing international attention on speeding up external debt restructurings, our core forecast remains that the IMF program will be approved by mid-2023.”
However, there is a material risk that IMF board approval will be delayed due to prolonged external debt-restructuring negotiations, given the involvement of multiple stakeholders in the process.
President Akufo-Addo’s call for Japan’s support in securing an agreement with the International Monetary Fund for a $3 billion balance of payment support is a critical move for Ghana’s economic recovery. Ghana’s request for a three-year, $3bn extended credit facility from the IMF was agreed upon in December 2022. However, debt restructuring with external creditors is necessary before the IMF’s Executive Board can approve the facility.
The Economic Intelligence Unit’s 2023 Country Report on Ghana highlights the country’s pressing macroeconomic crisis and anticipates Ghana securing restructuring agreements on its public external debt during 2023-24, involving official and private creditors alike. While there is a risk that IMF board approval may be delayed, President Akufo-Addo’s appeal to Japan for support is a step in the right direction.