Boost for cedi: $2bn inflows expected this year
Ghana’s international reserves will receive a major boost as the government expects almost $2 billion from its development partners by the turn of this year, Finance Minister, Ken Ofori Atta, has disclosed in an exclusive interview with the Graphic Business.
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In what is expected to excite the business community among others, the financial inflows will have a positive impact on the local currency which has, since the beginning of the year, started losing strength against the major foreign trading currencies particularly the United States greenback.
The government has already received the second tranche of $600 million from the International Monetary Fund (IMF).
The World Bank last week also announced that it had approved the first tranche of $300 million out of the $900 million three-year budget support facility.
The IMF is also expected to conduct two more reviews of its programme with the country, with each round expected to unlock approximately $360 million in each tranche.
Additionally, the World Bank is also expected to release some $250 million for the operationalisation of the Ghana Financial Stability, a special fund created by the government to support banks in the country which were heavily impacted by the implementation of the Domestic Debt Exchange Programme (DDEP) last year.
The African Development Bank is also expected to support the country with some $50 million facility.
It is expected that with all these funds coming in this year, coupled with inflows from the $800 million cocoa loan, this will present a huge boost for the local currency.
Throwing more light of the World Bank facility, Mr Ofori-Atta, said following the approval of the $300 million World Bank funds, the government was now waiting on Parliament to ratify the agreement to enable the disbursement.
He said the government was also confident of scaling through the two reviews by the IMF to enable the release of the third and fourth tranches of the bailout funds.
“The beauty of this year is that we have a lot of foreign inflows. We should have gotten this done last year but we didn’t so this year, we have the $600 million from the IMF and $300 million from World Bank.”
There is also supposed to be two reviews this year which would unlock $360 million each; we have cocoa loan coming in and another $50 million from AfDB,” the finance minister said.
Based on the expectations, he was confident that all these scenarios presented what he described as an exciting future for the economy this year.
2024 Economic outlook
On the outlook for the year, the finance minister was optimistic about the prospects for the economy this year against the cautious stance adopted by many economic watchers.
“We have turned the corner”, he repeated to demonstrate his confidence adding that “with the numbers that we are seeing coupled with the central bank’s reduction in the policy rate, there is also an indication that things are improving,” he said.
With that said, Mr Ofori-Atta was quick to admit that: “We still have more to do and we have to jealously guard our progress and make sure that we keep to the tenets of the IMF programme,” he stated.
Responding to calls for government to do more to keep its expenditure in check, Mr Ofori-Atta gave the assurance that the government would continue to control its expenditure while working tirelessly to increase revenue despite 2024 being an election year.
“We need to keep our eye on the ball and continue to move in the right direction, it’s tricky in an election year but we need to stay focused,” he said.
External debt
Commenting on the country’s external debt, he said the government was confident of finalising every agreement with regard to both the bilateral and commercial debts.
He said the government met with the Eurobond investors who hold about $13 billion of the country’s external debt in London last week and confirmed that the two parties had fruitful discussions.
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On the bilateral side, he said the Official Creditor Committee (OCC) co-chaired by France and China have also given their firm assurance to finalise a deal to restructure bilateral debts of about $5.4 billion.
“We are therefore confident that the external debt restructuring should be completed soon,” he stated.
He said once the external debt restructuring was completed, the government would revisit all stalled road projects and other infrastructure projects across the country.
“We paid the price, the DDEP was difficult for everyone so once we have done that, we should build on that,” he said.
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