TIG Post

Tag: IMF loan

  • IMF confident Ghana’s creditors will soon agree on debt restructuring

    IMF confident Ghana’s creditors will soon agree on debt restructuring

    One of Ghana’s top priorities is reaching an agreement with its external creditors, and the International Monetary Fund (IMF) has expressed optimism that progress will be made in restructuring the country’s external debt, particularly with the Paris Club.

    Following Ghana’s return to the IMF on July 1, 2022, due to its struggling economy, the government reached a staff-level agreement with the fund in December 2022 as part of the bailout process.

    This agreement opens the door for Ghana to secure a $3 billion Extended Credit Facility (ECF) in May 2023 to strengthen its balance of payments.

    During a press conference, Julie Kozack, Director of Communications at the IMF, stated, “We have seen strong progress toward creditors delivering on these financing assurances, and we’re hopeful that they can be delivered very rapidly.”

    She emphasized that obtaining financing assurances from official bilateral creditors is crucial for presenting the program to the Executive Board.

    In December 2022, Ghana and the IMF reached a three-year program agreement worth approximately $3 billion.

    Ghana has already successfully completed a Domestic Debt Exchange program with the involvement of key stakeholders such as the Ghana Bankers Association, the Ghana Insurers Association, and the Chamber of Corporate Trustees.

    The IMF loan program aims to support the post-COVID-19 recovery of developing countries.

    However, the Economist Intelligence Unit (EIU) has cautioned that Ghana’s approval from the IMF board may experience delays due to ongoing negotiations for external debt restructuring involving multiple stakeholders.

    The EIU also predicts that Ghana will reach restructuring agreements on its public external debt between 2023 and 2024, involving both official and private creditors.

    These agreements are expected to involve write-offs, maturity extensions, and interest rate reductions.

    Meanwhile, economist Prof. John Gatsi has expressed doubts that Ghana’s first loan tranche of US$600 million from the IMF will be approved by Wednesday, May 17, as announced by the government.

  • ‘Debt-ridden Ghana’s cedi posts world’s biggest gain against US dollar’

    This week, Ghana’s currency outperformed other currencies in relation to the dollar, fueling hopes that the indebted nation would soon be able to access a rescue from the International Monetary Fund.

    “The currency was the lowest in Africa last week, more than 30% undervalued compared to its 25-year history, so some return after the enormous decline recently isn’t that surprising,” said Charles Robertson, the global chief economist at Renaissance Capital Ltd. in London.
    Additionally, the IMF is here, which ought to make dollar support possible.

    The gains came even as the African nation put its local-currency sovereign bonds in what Fitch Ratings described as a “default-like process,” and the holders of its dollar bonds braced for capital losses. The restructuring is needed to put Ghana’s debt on a sustainable path and secure a $3 billion IMF loan.

    Investors are returning to some of the riskiest corners of emerging markets amid the dollar’s biggest quarterly decline since 2010. They’re betting that a Federal Reserve pivot to a less-hawkish monetary stance will continue to weigh on the greenback in the coming months.

    The cedi advanced Friday to 12.9648 per dollar, the strongest level since October on a closing basis. It’s still down 52% this year.

    Optimism on the cedi “is a combination of a somewhat more hawkish central bank, some progress on the restructuring front, and a bit of buying the news,” said Simon Quijano-Evans, the chief economist at Gemcorp Capital Management Ltd. in London.

    Other emerging currencies that outperformed this week include the Vietnamese dong, Chilean peso, Costa Rican colon, and Chinese yuan.