Professor Godfred A. Bokpin of the University of Ghana has questioned the government’s ability to fulfil the three-year extended credit facility (ECF) arrangement with the International Monetary Fund (IMF) within the agreed-upon timelines.
At the second edition of the Graphic Business/ Stanbic Bank Breakfast meeting, he stated that the existing scheme was designed with an extension in mind, taking into account the planned targets and the modifications needed to restore debt sustainability, which would be difficult to achieve, especially with the 2024 general election approaching.
To substantiate his point, he stated, “If you look at how we have managed ourselves, especially in an election year, you can almost predict with certainty that there will be an extension”.
After 10 months of deliberations and negotiations, Ghana eventually won agreement from the International Monetary Fund (IMF) Executive Board for a three-year budget support plan targeted at restoring macroeconomic stability and debt sustainability.
The extended credit facility (ECF), which would see the government receive a total of $3 billion, is also intended to promote structural changes and aid the country’s economic recovery after two years of economic hardships.
Ghana’s IMF programme is supported by the post-COVID-19 Programme for Economic Growth (PC-PEG), which is the government’s blueprint for addressing economic challenges, restoring macroeconomic stability, bringing debt to sustainable levels in the medium term, supporting structural reforms, promoting growth, and protecting the poor and vulnerable.
The PC-PEG’s primary goals include, among other things, restoring fiscal sustainability and minimising fiscal risks, particularly risk from contingent obligations from state-owned companies (SOEs).
It is also expected to re-anchor inflation expectations by attaining low and stable inflation, to improve the exchange rate regime, to restore investor confidence, to re-establish market access, and to open up new funding sources.