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Finance Ministry, BoG to sign MoU to guide repayment of $3bn IMF loan

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A Memorandum of Understanding will be signed between Bank of Ghana and the Ministry of Finance to guide repayment of the $3 billion loan to the International Monetary Fund.

The loan terms include a 0% interest rate with a grace period of 5.5 years and a final maturity of 10 years.

The 3-year arrangement between Ghana and the IMF is under the Extended Credit Facility (ECF).

The programme has a front-loaded fiscal adjustment of 5.1 percentage points of Gross Domestic Product (GDP) over 3 years (2023-2025) with the following Primary Balance (on a commitment basis) and fiscal adjustment (fiscal effort).

The Finance Minister, Ken Ofori-Atta, said, the debt operation (both domestic and external) are required to return the public debt to sustainability levels by 2028 by observing the two binding constraints.

They are the Public Debt (in present value terms) to GDP ratio of 55% or less; and External Debt Service to Revenue ratio of 18% or less.

The programme will be monitored and reviewed semi-annually.

The Finance Minister emphasised that Ghana’s Post Covid-19 Programme for Economic Growth, which is the government’s blueprint for addressing the economic crisis and underpins the IMF Programme is aimed at restoring macroeconomic stability; bringing fiscal operations and public debt to sustainable levels, supporting structural reforms and promoting strong and inclusive growth while protecting the poor and vulnerable.

The Staff Level Agreement (SLA) was secured in record time in December 2022, six months after Ghana applied for a Fund-supported Programme.

All five prior actions were completed.

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