The International Monetary Fund's board (IMF) has approved the disbursement of $114.6 million dollars for Ghana after a review of its 3-year bailout program with the West African cocoa producing nation on Wednesday January 13.
This was influenced by the performance of the ministry of finance in implementing the various fiscal consolidation measures under the bailout plan.
The IMF reached an agreement with Ghana on a new economic reform program that would be supported by a loan of about $940 million in February 2015.
The reform program seeks to boost growth and help cut poverty by restoring macroeconomic stability through tighter fiscal discipline, strengthened public finances, and slowing inflation.
“Completion of the review enables the disbursement of bringing total disbursements under the arrangement to ,” a statement from the Fund said.
“In completing the review, the Executive Board also granted a waiver for the nonobservance of the performance criterion regarding non-accumulation of external arrears, based on the corrective measures being taken by the authorities”, it added.
The Executive Board also approved new program targets for 2016.
The disbursement is to help strengthen the Ghana Cedi in the beginning of 2016. The previous $116 million that was approved in the second tranche of the three- year program is believed to have helped stabilize the Ghana Cedi in the last quarter of 2015.
IMF however urged government to “resolutely continue their fiscal consolidation efforts. With government debt continuing to increase and financing remaining a challenge, the 2016 budget rightly aims at a stronger consolidation than originally envisaged. In this regard, it is essential that the government sticks firmly to its policy of strict expenditure controls, by maintaining the wage bill within the budget limits, while controlling discretionary spending and protecting priority spending.”
Towards the end of the year, currency analysts predicted that the Ghana Cedi will hit the GHC4 mark and even surpass it. But that has not been the case. The currency has maintained its GHC3.8 to a dollar performance over the last quarter.
Rating agencies Fitch and Moody's downgraded the country's credit worthiness before its last Eurobond issue in September 2015.
Experts are however confident that with the IMF's endorsement, Ghana's credit worthiness prior to its next Eurobond issue will improve.