IMF open to renegotiating Ghana agreement with President-elect Mahama if...

The International Monetary Fund says it is open to renegotiating Ghana’s $3 billion financing programme with President-elect John Dramani Mahama's administration provided accompanying reforms aren’t jeopardised.

“IMF-supported programmes are developed collaboratively with each country’s authorities,” a spokesperson for the IMF said in response to Bloomberg. “Any changes must ensure that the economic objectives of the reform programmes remain achievable.”

The IMF’s primary focus under the current extended-credit facility is to support Ghana in restoring macroeconomic stability and ensuring debt sustainability while fostering long-lasting and inclusive growth, the spokesperson added. 

Ghana embarked on a debt restructuring and sought IMF help when it could no longer service its loans. State debt ballooned to almost 100 per cent of gross domestic product by the end of 2022. 

The debt crisis fanned inflation, which reached 54.1% two years ago before declining to 23 per cent at the end of November. The nation’s currency, the cedi, has depreciated about 60 per cent in the last four years, and the central bank increased interest rates to a two-decade high of 30 per cent before lowering it to 27 per cent.

Under the IMF programme, which began in May 2023, the government must achieve a primary budget surplus of 0.5 per cent of gross domestic product by the end of this year. It also needs to achieve a debt-to-GDP ratio of 55 per cent by 2028.

Mr Mahama, who won presidential elections last weekend to reclaim a post he last held eight years ago, has said he intends to renegotiate the IMF package to smooth out the repayment of restructured loans and reduce the tax burden on corporates. He’s also pledged to prioritise stability over economic growth after he takes office on January 7.

“We do not expect the NDC to walk away from the current IMF programme,” Barclays Plc said in a note to clients. “It seems reasonable to expect a renegotiation to help align the NDC’s economic preferences and tactical macro signalling with the programme.”

Mr Mahama beat Vice-President Mahamudu Bawumia in the election, winning 56.6 per cent of the vote.