President Nana Addo Dankwa Akufo-Addo of Ghana has sought the support of Japan to help his country secure an agreement with the International Monetary Fund (IMF) Board for a $3 billion balance of payment support. The President emphasized that Japan, being a member of the Paris Club, has a significant role to play in securing the IMF deal. Akufo-Addo made this request during a meeting with the Japanese Prime Minister, Fumio Kishida, at the Jubilee House in Ghana. He further stated that Ghana would repay Japan’s support.
Ghana requested a three-year, $3 billion extended credit facility from the IMF in July 2022, with the aim of restoring credibility among investors, building reserve buffers, and improving fiscal and debt sustainability. However, an agreement on debt restructuring with Ghana’s external creditors must be reached before the IMF’s Executive Board can approve the ECF. The involvement of multiple stakeholders in the debt-restructuring process is expected to delay Ghana’s approval by the IMF board.
The Economic Intelligence Unit (EIU) in its 2023 Country Report on Ghana, stated that Ghana is expected to secure restructuring agreements on its public external debt during 2023-24, involving official and private creditors alike. The report suggests that write-offs, maturity extensions, and reductions in interest rates could be included in the debt-restructuring agreements. Despite the pressing macroeconomic crisis in Ghana, the EIU anticipates the IMF program to be approved by mid-2023. However, there is a material risk that approval will be delayed, given the prolonged external debt-restructuring negotiations and the involvement of multiple stakeholders in the process.
In conclusion, securing the IMF deal is crucial for Ghana’s economy to recover robustly. The country’s request for a $3 billion extended credit facility and the subsequent debt-restructuring agreements with external creditors will have a significant impact on its economic stability. Therefore, the support of Japan and other Paris Club members will be instrumental in Ghana securing a favourable agreement with the IMF.