Transcript of IMF Press Briefing on Ghana

IMF News, May 24, 2023

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IMF Executive Board approved a $3 billion Extended Credit Facility (ECF) arrangement for Ghana; described as a "$3 billion-3-year program" and an "extended credit facility approved by the Board".
Program objectives:
- Restore macroeconomic stability.
- Ensure debt is put on a sustainable path.
- Lay the foundations for stronger and more inclusive growth.
Program emphasizes large, front-loaded fiscal measures, structural reforms, monetary policy tightening, flexible exchange rate policy, financial stability measures, and reforms to encourage private investment and job creation.

Fiscal: mobilize more domestic revenue and improve the efficiency of public spending; program aims to increase revenue from "13 percent of GDP to 18 percent".
Social protection: program "does, and will continue to, include efforts to protect the vulnerable" (examples: doubled benefits for LEAP, boosted allocations towards the school feeding program).
Structural reforms noted in: tax policy, revenue administration, public financial management, energy sector, and cocoa sector.
Monetary: Bank of Ghana has been raising interest rates and has "virtually, eliminated monetary financing of the budget".
Exchange rate: a "flexible exchange rate policy will also be implemented to help rebuild international reserves".
Financial sector: measures to preserve financial stability; regulatory forbearance described (reduction of capital conservation buffer from 3 percent, capital adequacy ratio from 13 to 10 percent, three-year period to rebuild).

Initial disbursement: a first release of $600 million (also referenced as $604 million U.S.) is available to the Central Bank and the government following Board approval.
Disbursement sequencing described by Minister: "$600 million release... then we move on to there’s six months where there will be another $600 million, and then we have about 5 different tranches over 6 months in the periods moving forward to get to the 3 billion."
IMF noted the ECF financing should help "ease financing constraints, including by unlocking more funding from the rest of the international community" and catalyze further support from the World Bank, bilateral creditors, and private investors.

Government launched a "comprehensive debt restructuring" including a Domestic Debt Exchange Program (DDEP).
Official bilateral creditors and private commercial creditors are separate negotiation tracks:
- Authorities aim to reach an understanding with official bilateral creditors by the time of the first review.
- Engagements with commercial creditors are underway with the goal of advancing discussions rapidly.
Target debt objective cited: bring debt down to "55 percent debt to GDP ratio".
External assurances: financial assurances delivered on "May 12th" (as referenced in the briefing) were described as "instrumental in securing yesterday’s Board approval."

Cited inflation path: inflation was "12.6" at end-2021; within a year in 2022 inflation rose to "54.1 percent" (Governor’s earlier comment) and was also referenced as "54.6" in subsequent remarks.
IMF and Bank of Ghana emphasize tight monetary stance until inflation is "firmly on a downward path".
Key indicators for near-term review: "zero Central Bank balancing of the budget" and an indicator on the "primary balance" will be included in June assessment criteria.
Reserve and external position: program aims to rebuild international reserves through tighter fiscal and monetary policy, exchange rate flexibility, and catalytic financing.

Social programs protected and expanded: program references doubling LEAP benefits and boosted school feeding allocations; Minister and Governor emphasized protecting vulnerable groups.
Financial Stability Fund: proposal to fund a Ghana Financial Stability Fund of "up to $1.5 billion" with " $250 million from the World Bank" and government contribution of "$500 million".
Banking sector effects of DDEP: main impact was reduced capital buffers; banks described as "very liquid" and Bank of Ghana stands ready to provide liquidity as needed.

First program review:
- Assessment based on quantitative objectives "as of end June".
- IMF staff will conduct the assessment and aim to bring the first review "to the board in November".
Conditionality and monitoring: program includes quantitative objectives and structural benchmarks; IMF stressed mechanisms to monitor implementation and flagged "strong Government’s political will and commitment" to reforms.
Expectations for creditor processes: authorities and advisors are engaging both official and private creditors with the goal of advancing restructuring discussions in line with program reviews.

$3 billion — size of the Extended Credit Facility.
3-year — program duration (described as a "3-year program").
$600 million — first tranche referenced as the initial release (also cited as $604 million U.S. in another comment).
$604 million U.S. — specific value cited for incoming funds.
5 different tranches over 6 months — Minister’s description of tranche sequencing toward the $3 billion.
$1.5 billion — proposed size of the Ghana Financial Stability Fund.
$250 million — World Bank initial contribution to the Financial Stability Fund.
$500 million — government contribution to the Financial Stability Fund.
55 percent — target debt-to-GDP ratio the program aims to achieve.
13 percent to 18 percent — targeted increase in domestic revenue as a share of GDP.
17 times — number of times Ghana has sought IMF support (reference to background question).
12.6 — inflation level at end-2021 (exact figure cited).
54.1 percent — inflation level cited within a year after end-2021 (Governor’s first cited figure).
54.6 — alternate inflation figure cited later in remarks.
Three-year period — timeframe given to banks to rebuild capital buffers after regulatory adjustments.
Commission expiration date referenced in attached notary: "Expires: November 30, 2024" (appears in the transcript’s certificate).

Italicized source: Transcript of IMF Press Briefing on Ghana, May 24, 2023, IMF Communications Department.