The International Monetary Fund (IMF) has highlighted that the Government of Ghana's debt restructuring strategy, although successful in implementation, is not adequate on its own to regain market access.
The IMF's Staff Report on Ghana emphasizes the importance of restoring market confidence in the sustainability of Ghana's economic policies, which necessitates significant fiscal adjustment despite facing political challenges.
The report also underlines the existence of high risks associated with regaining sufficient market access. The IMF explains that the substantial debt service obligations to the Fund following the conclusion of the program may pose difficulties in regaining market access.
To mitigate these risks, the IMF suggests that strong commitment and ownership by the authorities, along with continuous engagement with them and their advisors, are crucial before and after the program's approval.
Due to its debt distress situation, Ghana has been unable to access the international capital market since 2022.
IMF: Ghana's Capacity to Repay $3 Billion Extended Credit Facility Adequate
The IMF has assessed that Ghana's capacity to repay its $3 billion Extended Credit Facility (ECF) is sufficient, provided the program and debt restructuring implementation are successful and market access is eventually restored. However, this assessment comes with substantial downside risks.
The IMF states that, under the baseline scenario, which does not consider debt restructuring, several indicators of capacity-to-repay consistently surpass the top quartile of previous Upper Credit Tranche (UCT)-quality arrangements for Poverty Reduction and Growth Trust (PRGT) programs.
It further indicates that outstanding credit is projected to reach 5.3% of the Gross Domestic Product (407% of quota) in 2026, gradually converging towards the top quartile of past PRGT arrangements over the next decade. Ghana's low level of reserves also poses constraints on its capacity to repay.
At the beginning of the program, Fund credit outstanding accounts for 161% of gross international reserves and remain at approximately 50% of reserves by the program's end.