By Rachel Savage and Cooper Inveen
ACCRA/LONDON -The International Monetary Fund (IMF) will work with Ghana’s government to develop a potential support programme, it said on Wednesday, citing a “challenging economic and social situation” after a week-long visit to the West African nation.
Hundreds took to the streets of Ghana’s capital Accra last month to protest over high inflation, weak growth and a deteriorating local currency.
Days later, the government asked the IMF for support, despite months of repeated pledges not to do so.
“The IMF team held initial discussions on a comprehensive reform package to restore macroeconomic stability and anchor debt sustainability,” Carlo Sdralevich, head of the IMF team that visited Ghana from July 6-13 said in a statement.
The week’s discussions focused on improving the country’s fiscal balances, strengthening monetary policy and stabilising the financial sector via a domestic reform package that could be supported by the fund, he said in the statement.
Authorities hope that a package will help Ghana overcome its nearly $1 billion balance-of-payments deficit and bring down runaway inflation that hit 29.8% on Wednesday, the highest level since December 2003.
Ghana’s debt has steadily climbed from 54.2% of GDP in 2015 to 76.6% at the end of 2021, according to government data. Debt servicing cost just under 48% of government revenue in 2021 and Eurobond yields have been too high this year to issue new ones.
The finance ministry has blamed Ghana’s problems on recent external factors, including the COVID-19 pandemic and war in Ukraine.
The IMF said in its statement on Wednesday that such forces had left Ghana “limited room to manoeuvre”.
(Reporting by Rachel Savage and Cooper Inveen; Editing by Kirsten Donovan)
