According to the World Bank Country Director for Ghana, Pierre Frank Laporte, Ghana is likely to receive approximately 600 million dollars in the balance of payment support for next year’s budget.
He revealed this in an interview with Paa Kwesi Asare of TV3’s Business Focus.
“How much are we looking at if Ghana meets all of the criteria and receives budget support from the World Bank?” Paa Kwesi Asare inquired.
In response, Mr Laporte stated, “Normally, there is a hard rule and a soft rule, we can give around 30-40% of the country’s budget support, and for Ghana, we are looking at around $600 million.” “Ghana’s budget for the next three years is $1.5 billion,” he explained.
He also urged Ghana to expedite its application for an International Monetary Fund (IMF) programme to address the country’s economic challenges.
Without his assistance, he believes the country will struggle to deal with domestic challenges.
“There is an urgency; Ghana must address these issues as soon as possible.” “What has happened in the last few months is that inflation has risen, partly because of what is happening on the upside, but also because the currency has depreciated,” he explained.
“From where I sit, if nothing happens, it will be very difficult for Ghana to find another way out domestic debt structuring is very difficult,” Mr Laporte added. Why? Because banks typically invest in government papers and bonds, and when you ask banks to take care of such things, it affects capital adequacy and puts these banks at risk, whereas international debt is easier to reschedule or restructure.”
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Ghana is looking for a programme through the Fund.
The IMF’s Managing Director, Kristalina Georgieva, stated that an agreement between Ghana and the IMF should be reached and finalised by the end of the year.
In a closed-door meeting with President Nana Addo Dankwa Akufo-Addo on the sidelines of the Africa Adaptation Summit in Rotterdam, Netherlands, on Monday, September 5, she told him, “we understand the urgency, and we will move as quickly as possible.”
She described Ghana as a “superb country,” and reiterated the Fund’s determination to work with the government and the Ministry of Finance to reach an agreement before the end of the year.
President Akufo-Addo, for his part, told the IMF chief that a lot of work had been done by Cabinet and the Ministry of Finance, and that the document to be presented by the Ghana side “is ready for the IMF’s scrutiny.”
Meanwhile, Kristalina Georgieva has emphasised that Ghana’s current economic challenges are the result of external shocks rather than domestic factors.
Speaking on the sidelines of the Fund’s engagements with the Ghanaian delegation, Kristalina Georgieva stated that, contrary to the narrative that Ghana is in these difficulties as a result of bad policies implemented by the Akufo-Addo administration, the factors are exogenous.
“We have already begun very constructive discussions, and the people of Ghana, like everyone else on this planet, have been harmed by exogenous shocks,” she said.
She mentioned the external factors that have contributed to Ghana’s economic woes, prompting the West African country to seek an IMF programme.
“First there was the pandemic, then there was Russia’s war in Ukraine.” We must recognise that this is due to a combination of shocks, not bad policies in the country, and we must therefore support Ghana,” she said.
She also stated that Ghana is an IMF member, “a strong country with fantastic people,” and that the Fund owes the country assistance.
“We have to support Ghana because your strength contributes to the strength of your neighbours; it contributes to a stronger world,” Kristalina Georgieva added.
Ghana has asked the IMF for $3 billion to help the country navigate through the hostile economic crisis caused by the deadly coronavirus pandemic and the ongoing conflict between Russia and Ukraine.
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