Ghana Completes $3 Billion IMF Extended Credit Facility Programme Successfully | Channnel One News

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[00:00:00]101 101 101 >> Good afternoon. Thank you for joining us. Let me first introduce myself. My name is Anton. I'm the IMF mission chief of Ghana and region chief in Africa department. Um thank you my honorable Mr. Pson. I thank you very much uh for the opening remarks. Indeed I would like to uh echo what you've just said. We just concluded successfully concluded discussion on the gun on the final review on the extended train facility the article for consultations uh and at the same time on the request for the new arrangement at 36 month arrangement for post radiation instrument let's get used to the new radiation PCI we publish a comprehensive press release but let me highlight the mission's main conclusions Ghana's ACF supported program has delivered impressive stabilization needs. Location has declined rapidly.

[00:01:00]Reserves have been revealed and confidence in the safety has been restored. Fiscal discipline improved marketkedly with strong primary surplus and sharp decline in the debt ratio.

[00:01:12]Despite fiscal consolidation, what is very impressive growth has been very strong and even stronger than what we expected as supported by gold based private sector recovery and robust experts. These outcomes reflect the determined policy implementation and progress in that restructure and they mark an important turn turning point for the Ghanaian economy.

[00:01:35]As stability takes hold, our engagement is shifting beyond VC toward sustaining reforms and building resilience. We have reached a stop level agreement on the 36 month PCI. The PCI is as minister explained a non- financing engagement meaning that the pace of Ghana's dependence on MF financing is over.

[00:01:55]Instead, the PCI serves as a strong IMF stamp of approval, signaling to markets and developing partners that policies are sound and reforms are on track, helping to reinforce confidence and federalize investment in support. As minister has mentioned, legally speaking for us, PCI is not a problem. It's a form of technical assistance. We're very happy to engage in this new relationship with Ghana. The PCI will focus on multiple objectives. Importantly, sustaining growth friendly fis consolidation, safeguarding that sustainability, strengthening transparency and governance, reinforcing uh minding and financial policy frameworks, supporting diversification, inclusive growth and job creation. This instrument will entrench curability and lock in the gains achieved under DCF.

[00:02:46]Improvements in the debt trajectory have created fiscal space. This space can be now used to address pressing development needs, promote employment, especially among the young population, strengthening social and priorities.

[00:03:01]Importantly, this must be done without reversing to the hard the hard foreign stabilization. Maintaining discipline supported by stronger public financial management, better so of the site and reduced requirements will be very important for the external environment remains uncertain and volatile with risk from global conflicts and commodity price volatility. This underscores the need for continued cool and fiscal monetary policy, stronger bers, advancing structural reforms and enhancing resilience. The overarching objective going forward is to entrench economic stability and support stronger more inclusive growth. Sustainable momentum will be required. Strong institutions are needed and continue to focus on private sector growth and employment should be prioritized.

[00:03:53]Let me close by commending the Ghanaian authorities for their strong engagement and reforms and above all we would like to recognize the resilience and the determination of Gian people which has been central to this achievements which are undeniable. Avoiding past cycles of fiscal imbalances and rising sustaining the course on the points will be key to securing the durable going forward.

[00:04:18]Thank you very much and looking forward to answer your questions.

[00:04:27]Take me to identify yourself.

[00:04:45]Good afternoon. Um, congress again. My name is Joshua. with the business and financial times. So just for clarity, is there going to be a time frame for this particular um PCI? Is there going to be a time frame? And um also for clarity should investors see it as more or less a credibility more or less um an issue of credibility for the government. to sustain different market.

[00:05:27]>> Thank you sir. My name is C3. uh PC providers about the PCI how is it going to work and then also help us understand after the grade uh the upgrading by fish there are hints that government is planning to return to international capital market how soon to the IMF chief is that something you recommend what areations thank you my name is of news I want to get the IMF pre Olympics still remain been prevalent in the energy sector considering the gains made so far and uh because from several assessment I highlighted the energy sector in this moment that we are off by the technical assistance what should we be looking forward to how can government come out of this so we take two My name is Man from Burgess.

[00:06:30]My question also is on the PCI. I want to find out if the PCI imposes any policy commitments from the government of Ghana and also to the IMF. Quite recently the minister announced that some debt hold bank of Ghana by I want to find out if this is consistent with the program functionalities and if it faced into your assessments of the service.

[00:07:00]>> Thank you very much. The last one in this >> Thank you very much. Um so my name is just by now anytime Ghana has to follow the IMF for this reform especially in recent times um our leaders tell us that this is the very last time Ghana is going to open IMF that having concluded this one what are some of the lessons you would want to tell the Ghanaian government to carry along and cons able to consolidate these reforms that will actually bring to bear that particular desire not to return to the IMF in this form of go to the international capital market and if we find a need for us to go to the international capital market we will accordingly inform the people of Ghana.

[00:09:01]Um one thing is for sure the 2027 budget never assumed to uh for us to go to the international capital uh 2026 budget never assume that we are going to go to the capital market for any form of financing. So it is off the table at least for this year. Uh in the medium term it will depend on um what the government seeks to do but I can assure you that we are not in hurry to go back to the capital market. energy sector risk dialed and then the issues on bailout continues.

[00:09:39]Yes, PCI as I said is not.

[00:09:42]So, um what we seek to do is to make sure that whatever we do today is sustainable so that we don't go back to the good bad days uh where where we get to an emergency to situation that we have to go to. And it is for this reason why we are putting in place measures uh so that we don't get to where we have to go for out. Uh we believe that we do not have a need to go for a bail out currently. But it doesn't mean we should lower our guard. It means that we don't have to be complacent. We need to work more harder and we need to sustain the gains of economic stability to be able to attract private investments into our country and be able to build on it for sustainable growth that will benefit um particularly with employment. And so these are some of the things that we are putting in place. So bailout is out of the equation. But let me also make this point and um when I was a deputy minister here and minister he has often said that uh as for discipline there's always a price for discipline. So you can for example today come out of an IMF program and if you come out of an IM program and you decide to be disciplined for one year it may be enough justification to go back after the following year and so uh I I believe in it and clearly in discipline is what has landed Ghana on a number of payout programs because largely we deplete our reserves so fast and then uh we enjoy the benefits of consolidation so quickly and in the end we go back to where we don't have to be but what we seek to do going forward is to build on the momentum that this ECI has created for all of us and sustain it for a very long time so that the country can benefit from it and that's all what we are seeking to do. Thank you.

[00:11:56]>> Thank you very much. Um let me also express a few points on the questions asked for the time frame for the PCI as minister explained it's a 36 month PCI we plan to take the request for PCI to AMF executive board in the end of July at the same time with the final review under the ECF. So the both the final review and ECF will be completed and the new PCI will be initiated going forward and with 36 months we will finish hope to complete PCI uh sometime mid in 2029.

[00:12:30]Um so the structure of the PCI may uh look very similar to ECF. There are semiannual reviews as the minister has explained. There are policy commitments.

[00:12:41]uh things are called a little bit different instead of quantitative uh instead of quantitative performance criteria we have quantitative targets structural benchmarks are called reform targets but in principle it has the same structure to support that but the focus is very different the objective of the PCI as I have already mentioned is to support the reforms it's to support the government and the bank of Ghana's agenda to carry reforms going forward and uh it supposed to produce a strong signal this amp of approval of the IMF on the government's policies. That's why for us, as I mentioned already, legally speaking, it is a form of technical assistance. We're supporting the government in implementing their reform agenda going forward. We hope that this signal is going to be well received by the markets. Certainly, in our meetings with investors, this is something what the markets have been asking what's coming next after the ECF. Uh so we're very happy that the PCI was considered to be an appropriate instrument for uh the Ghanaian authorities. In terms of the um access to the capital markets, it's a sovereign decision for Ghana. We believe that going forward based on the fiscal trajectory we have discussed with the government uh government would be able to finance itself uh comfortably from domestic markets. We discussed the debt management strategy going forward and we believe that the resources are available and the confidence has returned facilitating uh recent access to the dome re-enter to the domestic capital markets which is a ultimate milestone of the success of the government policy agenda. Uh we in our discussion with international investors we do see a lot of interest in in exposure to Ghana. the good story of Ghana has been noticed and uh we get bombarded by requests uh from the investors to meet and talk about Ghana going forward. So whenever the government will decide to reenter capital markets uh certainly the interest will be there of course conditional and sustained progress in terms of the reforms um so the uh what are the lessons learned from the IMF bailout? I think um whenever I meet anybody asking questions about Ghana, the question I typically get is is this time is going to be different. Right? So this is something which is not the the question I can answer. I think minister has given assurances but let me just say a few words about my my reflections on many discussions we have had with Ghanaian authorities. We we believe that the lessons have been learned. It was very difficult, very traumatic for the Ghanaian people, for the country to go through the crisis of 2022 and the pain has been real and the this pain has been internalized and the reform momentum under the ECF demonstrates that the lessons have been learned that going forward. Of course, it's important to continue prudent policies and continue reforms. What ECF has managed is to successfully stabilize the country but stabilization and resilience are two different things. So focus needs to be on building resilience going forward and for that the ultimate objective is not the constraints of the IMF coming from outside but ultimately the strength of the domestic institutions and this is what we really try to internalize in terms of the design of the PCI when we discuss it with our counterparts here and the focus there is not on adjustment the focus is rather on strengthening domestic institutions fiscal institutions financial institutions to ensure that not no contingent liabilities uh are created outside of the central government that no quasi fiscal activities build fiscal risk going forward that no ses p fiscal risk going forward for the government which will when the shock comes materializing drain of public financial resources so this is the focus and we're quite hopeful that the lesson has been internalized and it will be different this time >> it will be all right >> thank you very much so we'll take more questions Good morning. My name is Morris. I work with GTV. Um to the IMF, the Bank of Ghana's negative equity position, does it pose any threat to our debt uh sustainability moving forward especially with the capitalization conversation going on? and to the finance minister.

[00:17:16]Uh we hear from some ministries, departments and agencies that we are not raising the money. Uh moving forward, moving forward will be a safe approach to ensure sustainability.

[00:17:40]My name is Fine. Um the president we did right not too long ago gave some measure of substance of the sort and pure prices.

[00:17:51]How much costing you do not know in respect of consolidation? Please ask and what are your thoughts on that?

[00:17:59]>> Who is that >> after stability? What next? We have heard this song for far too long. It's as though stability is the end of itself. by this what what's next after stability and then I have a final again people are categorizing the risks you have energy sector risks bank of Ghana if there be any risk to this program to this success we have and which could derail this economy again what would it be and what advice do you have for the government thank you good afternoon my name is I in the course of the implementation of the program Ghanaians incurred some cost including the haircuts. What is the conversation that the government has with that? And I would also want to know what are some of the efforts that the government intend to put in place to ensure that we are growing at a lower cost. We are able to generate more revenue and be able to especially build that.

[00:19:15]>> Okay.

[00:19:18]My name is I report one.

[00:19:22]My question has to do with the state government operators. So uh Mr. Minister, I want to find out um is there any further strategies um that will help cushion the impact some of these enterprises have on the scale balances and the public sector losses. The question from some exporters um if the national strategies to help cushion and the local parents.

[00:19:52]>> Yeah.

[00:19:59]>> Thank you very much.

[00:20:00]>> Let me start with a call.

[00:20:03]EO first we have not introduced subsidy and so the cost is zero. So um be rest assured I'm here with a minister responsible for energy and we have just to confirm that government of Ghana has not introduce any form of subsidy in the petroleum sector since the crisis second yes you ask a question from stability what next I think it's a chain of three stability resilience and development builds stability you build the stability stability, you build resilience and then use the resilience to develop. Um, clearly the stability is done. We've announced same. It's been confirmed even by the fund. We've built some good resilience and we are building it continuously. It's now time for us to develop and create jobs and that is where we are going. And so um in the coming days we'll be announcing our flagship uh design called a new economy um where we'll be looking at areas of development and job creation and that will be made known to the people of Ghana. But just to be assured that um from stability you build resilience and from resilience you you you build an economy that will benefit the masses and that is exactly where we are going. Um someone also asked a question as to whether government of Ghana is going to compensate um um those who suffered haircuts. Um I do not know the um details of the prospectors that was signed an agreement that was signed between those who suffered unfortunately loss of investment. Um I do not recall that there is something of the sort that calls on the people of Ghana uh the Ghanaian government to give some form of uh compensation. I I think it was not agreed to and so um um we do not have any such liability on us based on what was agreed. Then there was another question on the central bank's um um negative equity and what it means um to their sustainability.

[00:22:20]Yes, the government of Ghana has a responsibility to make sure that the central bank um has a strong finances.

[00:22:27]Um we are working with the central bank.

[00:22:30]Um central bank will obviously generate income and they will obviously make some profit going into the future. Um until recently the central bank used to pay dividend to the central government and that was the case. Obviously they will have to make profit before they pay dividend. Um today they are not able to do that and it started um in 2022. Um obviously as a result of some of the debt restructuring and and also some of the activities and and some of the actions um the central bank will do whatever it takes to return to profitability and then part of those profitability will be used to reduce some of the negative equity and then government will also come in uh to support the central bank and so we are working together both government and the bank to bring that negative equity down and uh in the medium term that will be solved. Um recently I went to parliament to present the new bank of Ghana bill uh amendment and in that amendment that has since been become a law uh it is obvious that government commit to fully capitalize the central bank by 2032 and so it's a gradual process and so gradually from now till 2032 6 7 years time the central bank will fully be capitalized and in that amendment we have also introduced automatic recapitalization.

[00:23:56]And so that's what what that means is that anytime the central banks um um falls below its minimum capitalization, the central government automatically capitalize the central bank in 3 months.

[00:24:08]And so all of that has been put in place. And so I can assure you that we are not just sitting with a care. It's important that our central bank is strong. It's important that we allow the central bank to also perform its mandate, constitutional mandate uh to ensure that um inflation is tamed and controlled and so we'll do whatever it takes to support the central bank to be able to do what perform their mandate when you put it that way. Thank you.

[00:24:36]>> Thank you very much. Maybe starting with the last point on the building negative equity. So um it's not unusual for central banks to have negative equity.

[00:24:46]So many central banks operate with negative uh capital. But what is important is what we call policy solveny. The fact that the income the central bank is generating can cover the all the costs and frictional costs and cost of doing monetary policy and bank of Ghana based on financial statement from 2025 has been policy solvent. So this is an important element to remember. So in terms of the debt sustainability we do factor in the cost of that going forward. act VDCA which will be published together with our staff report will assume a significant amount of recapitalization. We think we are actually overly conservative there as the minister has said central banks by running prudent policies can generate significant uh profits and these profits should be used to recapitalize the central bank and therefore reducing the need for the government to inject additional capital at the central bank.

[00:25:37]All that is part of our framework and we're quite uh confident that by 2032 or if not earlier the BG will be fully uh recapitalized. We also need to remember that 2025 was a very very unique year.

[00:25:51]There were multiple factors there which pressed the BD balance sheet specifically very high open market operation cost. It's the cost of doing monetary policy because inflation was high even though it was decelerating rapidly. uh the interest rates were also very high and therefore cost of this open market operations uh mopping up liquidity from the system were very high and that uh of course you know is a burden on the uh BG balance sheet also exchange rate depreciated which works in accounting terms against the BG uh income as well. Some of this has been compensated by the valuation changes on the gold which was uh quite good and as you know BG has sold some of its gold in the end of 2025 and we have fully supported this decision because it helped to lock in some of the valuation gains on on the gold uh going forward and support the income of the central bank. We there were also losses on the domestic gold purchase program and we have discussed with our counterparts how to minimize them and reduce risk factor and eliminated going forward and we'll be reporting that in the staff report.

[00:26:58]Now the on on subsidies uh in the fuel sector as the person to my right has mentioned um you know we confirm there are zero costs currently to to the budget because the it's not a subsidy it's a adjustment of the regulatory margin. It's not part of the domestic revenue pool. So it's a separate separate type of expense. So this was a temporary measure. The government introduced only temporarily which is very much in line with our advice. We don't want the measures which are introduced and then stick in there because it's very difficult to remove that. It's going to be automatically removed when uh as planned. So so overall we supported the decision but of course the risk is still there. The commodity prices are still volatile.

[00:27:47]Middle East conflict is still ongoing and therefore uh the the the volatility of f fuel prices is still there and a risk factor going forward. If uh there's any additional support going forward then we would recommend to do that through well targeted uh subsidies uh which are income based and merit based and you know reduces the drain and allocates on public resources and allocates the the resources only to those who really need the support. Um now uh in terms of the what's next after this stability as I mentioned in my introductory remarks we spent a lot of time discussing what the better than expected the faster than expected fiscal consolidation and the improvement in the debt trajectory means for the fiscal space. This fiscal space is ultimately the space what the government generated by strong uh policies and now which can be used going forward to support uh support uh economic growth support employment in and the strategic investment in important sectors and this was much of our discussion. I will not steal the thunder from the minister and the government in terms of the big announcements but uh we we understand what the strategy there going forward but again strong policy effort generated additional physical space and we're now discussing how to spend it this is a remarkable turnaround for Ghana going forward in terms of risks going forward I think I would like to highlight two things first is again related to the fiscal uh policy I think we jointly managed use strong safeguards in terms of controlling uh government expend expenditures in the central government but there are significant risks outside of the central government control meaning in the S so sector and fiscal activities outside of the central government and historically for Ghana that was predominant factor which drove the trajectory of the debt sustainability it's not just the fiscal deficit itself but also the quasi fiscal activities and the materialization of fiscal risk outside of the central government which generated big shocks in the in the in the that trajectory going forward and addressing those as part of the PCI reform agenda will be critical uh thing for us to do. The second risk I would like to highlight is gold. Of course I don't need to tell you gold prices have been historically high and that supported uh going to turn around.

[00:30:21]Uh it's hard to predict where the gold price is going to be in the future.

[00:30:24]Commodity prices are always very volatile especially in the uncertain geopolitical environment. But that's why much of our discussion with the authorities with the BG with minister of finance is to how to build the buffers using the positive terms of trade shock for Ghana right now and how to ensure that the economy is insulated from these shocks going forward if and when we materialize. So these are kind of important things I wanted to highlight.

[00:30:49]Thank you.

[00:30:51]So that will be it for today's briefing.

[00:30:54]Thank you all for coming.

[00:31:11]I had one question.

[00:31:39]Yes, I'm well. Thank you.

[00:31:41]>> Goes to you.

[00:32:01]Finance Minister uh Dr. Casiato Fors in there and of course the chief of mission for the IMF making that official announcement the successful completion of that $3 billion um extended credit facility the Ghana IMF deal. Now joining me for a quick conversation on this announcement is uh Ni Lati Latti from the channel one news.

[00:32:25]Um good of you to join us.

[00:32:27]>> Thank you very much.

[00:32:28]>> What exactly does this announcement mean? Because we've heard in the news also that we officially exit IMF in August.

[00:32:36]>> So this announcement, what does it mean?

[00:32:38]>> Okay, so this announcement is a sequel to the sit and final review of our $3 billion extended credit facility. You know sometime in 2022 government of Ghana under the former government that's Narodang Kufar went to the international monetary fund for some bailout support which was because of the fact that >> the country was facing serious balance of payment issues. So inflation was going up reserves were depleting the currency was also depreciating and as a result of you know what they made us to believe was the coid9 crisis as well as the Russian Ukraine war. to went to the IMF for some bailout support, a three-year one of course, which gave us $3 billion. Now, we've received six dispersements under the program, and this is the s and final review. For which reason, today the government of Ghana is announcing a conclusion of that particular bailout package following the approval of the board of the IMF all the way in Washington DC. So what this means is that we've concluded our three-year credit facility with the fund >> subject to that particular technical extension. You know we went to the fund in April. So we were expecting to exit in April but there was some technical extension to finetune some of the things that we're doing under the fund. So by August we expect to fully exit. But the big news here is that the government is seeking a PCI policy coordination instrument which means that they are going in for a technical support or some form of arrangement with the fun that after we exit they should be able to help us maintain that kind of stability we've achieved so far. So what this means is that well it's subject to the normal IMF ECF program there are structural benchmarks there are qualitative and quantitative you know criteria. However, this particular technical assistant is not going to enable us withdraw or receive any form of disbment. So, it's a no cash, you know, financial support. So, you're not going to receive any form of support.

[00:34:39]Although this Sith review will unlock some $360 million US at the last branch, but we are not going to receive any money diseasement after this monary assistance as monetary assistance. So it's just technical support to help us you know exit the program successfully.

[00:34:55]So this is a threeyear you know technical support and non financial support support that the the the IMF is going to give and it is something that all member countries enjoy after they are able to fully exit the the program.

[00:35:09]So government is saying that there is no rush to the international capital market which is one of the biggest conversations when it comes to IMFO. You know government has returned to the domestic market and which is one of the places it is relying on to raise some form of revenue. But for international capital market the government says that it is not in a rush >> but the IMF says that >> whenever the the government feels like going to the international capital market they are liberty to do that.

[00:35:35]>> That was the expectation of many.

[00:35:36]>> Yes that was the expectation of many.

[00:35:38]But you know when the IMF supports you it also unlocks a lot of other dispersment from donor partners. talk of the World Bank, talk of you know some other other facilities. So >> if you are saying that we are not going to the international capital market, good on the part of government but the big question is whether we'll be able to raise a lot more of money from the domestic capital market.

[00:35:59]>> There were concerns regarding the BOG's negative equity and exit from the IMF program. I think a question was posed on that. What do you make of that?

[00:36:09]>> Yeah. So, the explanation both the government and the IMF mission team gave was that they expect the Bank of Ghana to return to profitability come 2036.

[00:36:18]Mind you, there is a six-year transition period for which the government expects the Bank of Ghana to move from its negative equity as we speak. The negative equity is in excess of you know 90 billion Ghana CDs. You remember 60 billion Ghana CDs from the beginning of the year plus the 34 negative equity you recorded 2025 coming together to some 94 billion Ghana. So the bank of Ghana governor Dr. Johnson finance minister Dr. for >> based on the amended government of Ghana and Bank of Ghana amendment act.

[00:36:51]>> They are looking at >> 6 years beginning 2026 to 2020 um 2036.

[00:36:58]You remember they said that the government of Ghana was not going to give any form of financial assistance to the bank of Ghana to you know restore its balance sheet but based on the amendment there is some form of financial support coming in from the government. So that is why the two sides are working together to ensure that that particular situation is reversed so that the bank of Ghana restores its balance sheet come 2036. Veroni, thank you so much uh for joining us with that explanation. Neil Lati Latt is my colleague here in the channel one newsroom helping us uh if you like make more uh sense of that announcement by the government together with the IMF mission uh regarding the successful completion of that $3 billion extended credit facility. I am Natu for bringing you updates in our subsequent bulletins here on channel 1 TV. We have Newsfeed at 4:30 and then we have the Channel One Newsroom, our major news bulletin at 8:00 p.m.