Ghana is expected to secure a Board approval for its $3bn IMF bailout programme by the end of the second quarter of this year – June 2023.
This is according to research firm, Fitch Solutions.
The assertion by Fitch Solutions follows the failure of the government to secure a board approval at the end of March 2023 as promised despite the execution of the domestic debt exchange programme and passage of three tax revenue streams.
Making the assertion in its recent report on the Ghanaian economy, the agency noted that, the board approval of the bailout programme will among other things, unlock critical financial assistance, shore up the country’s foreign exchange reserves, improve investor confidence and aid the BoG complete its monetary policy tightening cycle.
“Our core view is that Ghana’s staff-level agreement with the IMF will receive executive board approval in Q223, which will unlock critical financial assistance, shore up the country’s foreign exchange reserves and improve investor confidence.
“These dynamics will likely lead to greater stability in the exchange rate, with currency weakness having been the key driver of inflationary pressures since 2022. This will reduce import costs and exert downward pressure on consumer price growth, allowing the BoG to conclude its monetary tightening cycle,” it stated.
Fitch Solutions however warned that, failure of the government to once again achieve a board approval in June, will result in further deterioration of the country’s foreign exchange reserves and a sell off of the local currency – cedi.
“If Ghana fails to obtain critical IMF funding by the end of Q223, the cedi would sell off again due to weak investor sentiment and falling foreign exchange reserves. In this scenario, inflation would increase, which indicates that the BoG would tighten monetary policy beyond our current forecasts,” it noted.