The Ghana Cedi has experienced a remarkable 33% gain against the US dollar in the past six months, surpassing all other global currencies, driven by investor confidence in the country's potential approval for a US$3 billion bailout from the International Monetary Fund (IMF), according to Bloomberg's currency tracker.
Investors have enjoyed strong returns from Ghana's dollar bonds, delivering nearly 12%, outperforming the 3.6% average for emerging and frontier markets in a Bloomberg index.
Mohammed Amin Adam, the Minister of State for Finance, expressed optimism about the forthcoming IMF board meeting and anticipated that the initial tranche of US$600 million would be disbursed immediately upon approval.
The positive sentiment surrounding the potential bailout has contributed to the Cedi's recent strengthening, with expectations that it may trade below 10 against the US dollar.
An African economist at Rand Merchant Bank, Daniel Kavishe, highlighted the market reactions observed in countries receiving IMF programs coinciding with immediate disbursements of funds.
While an IMF spokesperson confirmed the Wednesday board meeting, they refrained from commenting on specific amounts to be received until after the meeting concludes.
The anticipated funds will help replenish Ghana's foreign-exchange reserves, which have declined by almost 50% since their peak in August 2021 due to the central bank utilizing reserves to alleviate pressure on the Cedi following the country's debt default.
Ghana is utilizing the Group of 20's Common Framework to restructure its debt as part of its efforts to secure the IMF program, which aims to enhance coordination between traditional sovereign creditors like the Paris Club and newer creditors such as China, the largest lender to emerging economies.
Other countries, including Zambia and Ethiopia, are also leveraging this framework to address their debt challenges.
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