Govt, IMF agreement brings in $370m

Ghana has secured a critical staff-level agreement with the International Monetary Fund (IMF), guaranteeing the release of a $370 million fifth tranche under the country’s $3 billion bailout programme. 

The agreement, reached after two weeks of intensive talks with IMF officials, marks a pivotal step in Ghana’s ongoing efforts to stabilise its economy and accelerate reform.

It is the first negotiation with the IMF under the new administration since taking office in January 2025, indicating the government's commitment to full completion of the three-year programme. 

Finance Minister Dr Cassiel Ato Forson, at a joint press briefing with IMF officials in Accra yesterday, described the deal as a “significant milestone” and reaffirmed the government’s commitment to restoring macroeconomic stability, achieving debt sustainability and protecting vulnerable populations.

“What rather started as the most difficult review of the programme has ended successfully,” he said.

Once approved by the IMF’s Executive Board in the next three months, the disbursement will bring Ghana’s total receipts under the programme to approximately $2.3 billion since May 2023.

Dr Forson acknowledged that his administration inherited a programme that had derailed from several fiscal and structural benchmarks by the end of 2024, with inflation overshooting targets and key reforms stalling.

He added that “in response, the government has moved swiftly to reorient policy and correct course.”

Among the actions taken is an independent audit of a stockpile of arrears accumulated in 2024, led by the Auditor-General and two international firms, while legislative reforms have also been introduced.

The report, expected within eight weeks, aims to verify the arrears’ legitimacy and recommend corrective actions.

Indeed, Parliament has also amended Ghana’s Public Financial Management Act to include a debt ceiling of 45 per cent of gross domestic product (GDP) by 2035, and to mandate an annual primary surplus of at least 1.5 per cent of GDP.

A new independent fiscal council will now oversee compliance, while procurement rules now require the Finance Ministry’s certification for all central government contracts.

The IMF welcomed those measures, although it acknowledged the country’s recent challenges. 

Govt committed

Dr Forson stated that the government was committed to the full implementation and objectives of the programme.

“Let me repeat that this mission was largely focused on the implementation of the programme to ensure that the ECF is on track and the programme will be implemented to observe the spirit and design of its objectives.

“And so, going forward, if the government takes any decision on the extension of the programme, we will communicate to the public,” the minister said.

He said despite initial setbacks and inherited challenges in structural benchmarks and quantitative targets, the new government had worked “tirelessly to reverse the situation” and even exceeded some targets well ahead of deadlines set under the IMF-supported programme.

This, he said, was due to some pragmatic and bold measures put in place to address the large payable build-ups as at the end of 2024, which resulted in a large primary deficit compared to the programme’s modest surplus.

He said those measures were aimed at strengthening the country’s spending commitment control system, eliminating the accumulation of payables, enhancing budget credibility and promoting fiscal and debt sustainability.

Towards that, he said, the Auditor-General and two other international audit firms had been commissioned to audit the payables and commitments to validate their legitimacy and value, as well as to provide recommendations for action.

The minister added that the audit would be completed in the next eight weeks.

“We have also passed an amendment to the Procurement Act and Public Financial Management Act 2016 (Act 921).

We have operationalised a compliance desk at the ministry to monitor commitment of ministries, departments and agencies to the Public Financial Management Act, 2016,” he said.

Dr Forson stated that the government had been able to migrate 549 ministries, departments and agencies and metropolitan, municipal and district assemblies onto the national business system to enhance expenditure tracking and financial discipline.

“It has ensured the publication of revenue audit reports for the Electricity Company of Ghana covering the fourth quarter of 2023 and the full year of 2024, delivered ahead of the June 2024 deadline, as well as the implementation of quarterly electricity tariff adjustments, a structural reform that was due by the end of 2024, but commenced in early 2025,” he said.

“I would like to assure the Ghanaian people, the IMF and other stakeholders that these key conditionalities are met to ensure the programme is on track,” he said.

IMF Mission Chief, Stéphane Roudet, said preliminary data pointed to fiscal slippages ahead of the 2024 general election, with arrears accumulating and inflation exceeding targets due to delayed policy implementation.

He said the country’s recent macroeconomic performance under the IMF-supported programme had otherwise been strong generally.

Despite some significant concerns regarding fiscal discipline and delays in the implementation of key reforms, he said the new authorities had taken bold measures to address policy slippages and ensure the programme objectives remained within reach.

“On the fiscal front, the government has launched an audit of the payables to firm up the size and nature of the slippages. Based on preliminary estimates of new payables, the primary balance posted a deficit of some 3.25 per cent of GDP (compared to a targeted surplus of 0.5 per cent of GDP).

“To address these slippages, the authorities have enacted a 2025 budget that targets a 1.5 per cent of GDP primary surplus, and adopted several public financial management reforms. The latter includes an enhanced fiscal responsibility framework and new rules to tighten expenditure commitments,” he said.

Firm implementation

The Mission Chief stressed the need for a firm implementation of corrective measures to address structural weaknesses and curb the accumulation of arrears.

“Achieving the programme objectives will require steadfast implementation of corrective measures, accompanied by renewed efforts to limit potential carryover effects into 2025.

The findings of the ongoing audits will play an important role in coming up with the right measures,” he said.

Mr Roudet explained that there was a need for key reforms to enhance governance and transparency while strengthening controls in the energy sector.

He said a reduction in arrears combined with structural reforms would help to reduce the energy sector’s fiscal burden.

Core recovery

The Governor of the Bank of Ghana (BoG), Dr Johnson Pandit Asiama, said the central bank was mandated to ensure price and financial stability as a key factor under the recovery process.

“Inflation has continued on the disinflation path, reflecting tight monetary policy stands, improved foreign exchange market conditions, and easing global commodity pressures.

“These reflect deliberate policy choices by the BoG and other authorities grounded in our stand for the local dynamics and national priorities,” the Governor said.

Dr Asiama said the external payment system had continued to improve, reflecting strong export performance driven by the country’s gold reserves and remittance flow.

He added that this strong balance of payment outturn had contributed to an accelerated accumulation of international reserves and, consequently, stability in the foreign exchange market.