The Bank of Ghana (BoG) has announced that it has been able to save $2 billion as a result of the external debt suspension exercise embarked by government.

The government as part of requirements for securing a $3 billion programme with the International Monetary Fund (IMF) was required to renegotiate its external debt.

Addressing journalists at a news conference after the Monetary Policy Committee meeting, the Governor of the BoG, Dr. Ernest Addison said the development has impacted positively on the country’s Balance of Payments.

“This has also contributed to the Ghana cedis’ stability. Compared to a year ago, when we were paying a lot to service the external debt, the situation is now better” he said.

Describing it as relief, Dr. Addison said Ghana’s International Reserves now stand at 5 billion cedis as at the end of August 2023. 

This, he said should cover about 2.4 months of imports.

Ghana’s economic growth and IMF projection

Ghana was expected to end the year at around 1.5% import cover under the IMF programme.

However, Dr. Addison is of the view that Ghana may end 2023 around 3 percent import cover.

“We have been looking at the GDP numbers coming up. That is the first and sector quarters and there are strong indications that we can perform far than what the IMF has projected”, h stressed.

Ghana’s growth outlook was lowered due to the negative impact of the COVID-19 and the Domestic Debt Exchange Programme. 

The Finance Minister, Ken Ofori-Atta earlier this year told Parliament that he expects growth to also pick up strongly from 2024.

IMF Programme performance

Ghana in May 2023 secured a three year programme with the IMF to help stabilize the economy.

Some economic analysts have argued that the impact of the IMF programme has slowed compared to what was experienced by African country, Zambia when it went through similar programme.

“The IMF programme is doing what it is supposed to do, when it comes to stabilizing the economy, growth is improving, inflation is going down and the Exchange rate is not doing bad”, Dr. Addison maintained.

“These are the conditions needed to aid in the recovery of the economy, sustain growth and rebuild confidence”, he added.

Inflation outlook

Dr. Addison also expressed optimism that Ghana will end the year with an inflation rate of 29 percent as had been projected

“We were initially worried, when inflation rate got stuck around 42, however with what we have witnessed in August, the committee believes that we are on track to hit our projected target”.

The Governor maintains that Inflation Rate reducing significantly in the coming months should also impact on the cost of credit and treasury bills rate as well.

Ghana Stabilization Fund

Mr. Ofori-Atta in the 2023 Budget announced that government will establish a Ghana Stabilization Fund to support banks that have been negatively impacted by Debt Exchange Programme.

Responding to why there have been a delay in setting up the Fund, Dr. Addison said it will fully takeoff in early October 2023.

“Government is already providing the required capital, the World Bank is coming on board as well as other donor partners”.

Ghana’s Cocoa Loan Syndication for next year

Dr. Addison disclosed that COCOBOD is expected to raise about $800 million dollars in the coming weeks as part of its cocoa loan syndication programme to support purchases for next crop season.

This can be described as significant reduction from what COCOBOD has been borrowing over the years.

It’s not clear how this could impact on production for next year.