The seal for the International Monetary Fund is seen near the World Bank headquarters (R) in Washington, DC on January 10, 2022. (Photo by Stefani Reynolds / AFP) (Photo by STEFANI REYNOLDS/AFP via Getty Images)

ACCRA/LONDON, July 13 (Reuters) – The International Monetary Fund (IMF) will work with Ghana’s government to develop a potential support programme, it said on Wednesday, citing a “challenging economic and social situation” after a week-long visit to the West African nation.

Hundreds took to the streets of Ghana’s capital Accra last month to protest over high inflation, weak growth and a deteriorating local currency.

Days later, the government asked the IMF for support, despite months of repeated pledges not to do so.

“The IMF team held initial discussions on a comprehensive reform package to restore macroeconomic stability and anchor debt sustainability,” Carlo Sdralevich, head of the IMF team that visited Ghana from July 6-13 said in a statement.

The week’s discussions focused on improving the country’s fiscal balances, strengthening monetary policy and stabilising the financial sector via a domestic reform package that could be supported by the fund, he said in the statement.

Authorities hope that a package will help Ghana overcome its nearly $1 billion balance-of-payments deficit and bring down runaway inflation that hit 29.8% on Wednesday, the highest level since December 2003. Read full story

Ghana’s debt has steadily climbed from 54.2% of GDP in 2015 to 76.6% at the end of 2021, according to government data. Debt servicing cost just under 48% of government revenue in 2021 and Eurobond yields have been too high this year to issue new ones.

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The finance ministry has blamed Ghana’s problems on recent external factors, including the COVID-19 pandemic and war in Ukraine.

The IMF said in its statement on Wednesday that such forces had left Ghana “limited room to manoeuvre”.

(Reporting by Rachel Savage and Cooper Inveen; Editing by Kirsten Donovan)