The Executive Board of the International Monetary Fund (IMF) is set to meet in Ghana today, June 28, amid high expectations for a positive outcome. The meeting will focus on the Second Review Under the Extended Credit Facility, as per the IMF’s published calendar.
A successful review is anticipated to pave the way for the disbursement of Ghana’s third tranche amounting to $360 million, a critical inflow aimed at stabilising the cedi, according to Finance Minister Dr Mohammed Amin Adam.
Ghana reached a staff-level agreement for the Second Review in April this year following an assessment by an IMF team on the country’s performance.
The review was based on several key performance indicators, including six Quantitative Performance Criteria, three Indicative Targets, and one Structural Benchmark due by December 2023, alongside four Structural Benchmarks due by March 2024.
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Ahead of the Board meeting, Ghana has strategically positioned itself by securing debt restructuring agreements with external creditors, including bilateral and commercial creditors, which were prerequisite conditions.
However, there were two outstanding issues from the staff-level agreement. These include targets for the energy and cocoa sectors. Observers suggest that the planned increase in electricity tariffs effective July 1 and efforts to enhance the effectiveness of the Cashwaterfall mechanism could address the energy sector targets.
The specific target for the cocoa sector remains unclear, but attention is focused on cost-cutting measures by the Ghana Cocoa Board and ongoing rationalisation of the cocoa road sector to ensure adequate resources for completing road projects.
Despite initial stability in the cedi following the weekend announcement of the bondholder deal, the currency faced renewed pressure on Thursday, June 27, with the dollar opening trading at GH¢15.40 and GH¢15.55 due to limited dollar supply, compared to GH¢15.30 and GH¢15.50 that was maintained from Monday to Wednesday.
As Ghana awaits the IMF Board’s decision, analysts caution that while the forex market may remain relatively stable, the $360 million IMF inflow alone may not be sufficient to sustain the long-term stability of the cedi.
