Research firm, IC Research, is warning that the lingering debt settlements of government such as SWAPs and multilateral debts pose downside risk to the country’s foreign exchange (FX) reserves in the near-term.

This it said should however be mitigated by multilateral supports and cocoa loan syndication.

Ghana’s Net International Reserves fell to $2.3 billion in June 2023, about 1.1 months of import cover.

This comes after the International Monetary Fund (IMF) released $600 million as the first tranche of a bailout package to revive the Ghanaian economy.

But IC Research said despite the country’s current account position improving in the first-half of 2023, there are still challenges.

“Notwithstanding the improvements in the external accounts in addition to the programme-related inflows of $600 million from the IMF, we observed a 15.6% month-on-month drop in the Net International Reserves to $2.3 billion in June 2023 (1.1 months of import cover). The Governor attributed this drawdown to liability settlements such as FX SWAP maturities”.

“While the Governor’s indication that the Central Bank is ahead of target on its Gold-for-Reserves purchase programme is re-assuring, we view the lingering liability settlements (such as SWAPs and multilateral debts) as downside risk to FX reserves in the near-term. This should however be mitigated by multilateral supports and cocoa loan syndication”, it added.

Ghana’s current account balance reached a surplus of $849.2 million in the first-half of 2023 as against a deficit of $1.1 billion in the first half of 2022.

The improved current account balance was aided by a 22.5% year-on-year growth in inward remittances to $2.4 billion and the ongoing suspension of external debt service.