The Governor of the Bank of Ghana (BoG), Dr. Ernest Addison has disclosed that all the $600 million from the International Monetary Fund (IMF), representing its first tranche of disbursement will be advanced to government to support the 2023 budget.

“The IMF was very clear from the beginning in terms of this particular transfer that it was specifically for the budget support,” Dr. Addison said at a press briefing after the Monetary Policy Committee of the BoG met.

He pointed out that the central bank will credit government’s account in cedi equivalent.

“The BoG will however benefit, when it comes to the forex inflows, this is because we will take the dollars and credit the cedis to government accounts”

Finance Minister Ken Ofori-Atta earlier disclosed that the first tranche will be used to support the budget, a statement that was corroborated by the BoG.

Some analysts have earlier suggested that all the funds will be used to support the budget.

“If it was a purely a budget of payment support, there will have not been a counterpart to support the budget, and the Bank of Ghana will have sterilized the full impact of the expected forex inflow”, Dr. Addison stressed.

He stated that the Bank of Ghana has to manage the liquidity implications of the budget support for the economy.

Ghana’s IMF programme

The IMF Executive Board on May 17, 2023 approved Ghana’s Economic programme that will see the Fund advance some $3 billion to Ghana. The funds will be spread over three years.

According to the government, they are expecting to get about $1.2 billion this year. 

Government is expecting another disbursement of a $600 million that should come in November 2023.

However this will be subject to meeting conditions under the IMF programmme.

Dr. Addison noted that the IMF programme will help re-establish investor confidence in the domestic economy.

“While this development is positive for the domestic economy, it is conditional on a strong implementation of the fiscal and structural policies under the programme going forward”, he warned.

BoG’s Reserves and IMF programme

Governor of the Bank of Ghana Dr. Ernest Addison also stated that based on these disbursements, the BoG’s Gross International Reserves has witnessed some marginal growth.

Ghana’s Gross Dollar reserves ending April stood at $5.2 billion – but to $5.6 billion after the IMF disbursement.

Ghana’s Debt and cedi’s stability

Ghana’s total debt stock dropped by ¢141 billion from November 2022 to ¢434.6 billion.

The development can largely be linked to the cedis’ strong recovery in December last year.

“When half of the total debt stock is denominated in foreign exchange, a slight movement in the exchange rate, may present some major challenge for your economy”.

“Anytime we see a slight movement in the currency it presents major challenge for us”

Dr. Addison however stated that the development doesn’t affect its focus as a central bank to ensure that it brings inflation under control.