IMF approves one-year extension to Ghana's credit programme

Accra - The International Monetary Fund (IMF) has approved a one-year extension of Ghana’s $918m credit-facility programme after a review of the nation’s progress on monetary and fiscal reforms.

The extension will give the West African nation more time to achieve targets such as narrowing the budget shortfall. The IMF approved a payment of $94.2m to Ghana, bringing total disbursements to $565.2m, according to an emailed statement from Washington on Wednesday. The rest of the installments from the loan programme will be tied to the country’s remaining reviews, the fund said.

The government of President Nana Akufo-Addo, who came to power in January, asked the IMF to allow it until the end of next year to reach the plan’s objectives after the previous administration failed to rein in public spending in 2016.

READ: Ghana to cut 2017 spending as it struggles to raise revenue

While the lender recommended that the program be extended to allow Ghana more time to reach fiscal-consolidation targets, Akufo-Addo has said the 2018 budget is the last one that will be drawn up under the plan.

“The new government has committed to macroeconomic stability, fiscal discipline and an ambitious reform agenda,” the fund said in its statement. “Decisive implementation of these policies and reforms would allow Ghana to reap its economic potential and achieve higher and more inclusive growth rates.”

Ghana’s budget deficit for 2016 was 9.3% of gross domestic product compared with an initial target of 5.3% under the IMF programme. The government announced in January it discovered about 7 billion cedis in unplanned spending by the previous administration, startling markets and weakening the currency. The shortfall is forecast to narrow to 6.3% this year.

Ghana’s economy expanded 3.5% in 2016, the slowest pace in 25 years, and growth will probably accelerate to 9.1% in 2018 as oil and gas production increase, according to the finance ministry.

The cedi traded 0.1% weaker against the dollar at 4.425 as of 5:34 in Accra on Thursday. The currency has declined 4.5% this year.

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter: Fin24’s top stories