It could take as long as eight months of negotiations for Ghana to secure funding from the International Monetary Fund, investment bank, IC Securities has disclosed in its comprehensive analysis of Ghana’s fiscal economy.

This means the country will have to wait until March 2023 before receiving inflows from the Fund.

Titled “The music has appears to have stopped globally, and Ghana is scrambling for a chair”, it said policymakers must secure alternative funds soon, considering the country’s diminishing foreign exchange position—at a 12-month low of 3.4 months of import cover.  

Furthermore, it said short-tenors and quick rollovers of local currency debt present an immediate concern.

Secondly, local currency bonds have short-tenors and high rollover frequencies, which could immediately destabilise the fiscus or ‘money bag’ if not addressed.

Another option, it said, is for Ghana to fund a debt rollover through the central bank, “but this scenario would require the BoG’s [Bank of Ghana’s] buy-in, and their funds.”

“At current market levels, it appears the BoG will fund Ghana’s maturing bond repayments”, it stressed.

“Ghana has already secured 80.0% (¢28.0bn) of the 2022 budget financing from the domestic market, with substantial assistance from the BoG (¢22.0bn – of which ¢11.0 billion is part of an active overdraft facility”, it aded.

“We attach severe currency risk to the BoG stepping in to fund either budget operations or government’s repayment of maturing bonds. Rational investors—aware that fiscal operations are centrally funded—may opt to buy and hold US dollars”, it concluded.

Ghana in June 2022 sought assistance from IMF for economic support

Ghana in June 2022 sought assistance from the IMF for an economic support, due to imbalances within the economy.

The Fund subsequently confirmed to have received a request from the Ghanaian government for economic support.