Ghana eyes executive board approval for $3bn IMF bailout

Ghana's President Nana Akufo-Addo announced that the country is approaching executive board approval for a $3 billion International Monetary Fund (IMF) bailout by the end of this month. AbdulAzeez Kuranga, a Macroeconomy Strategist at Cordros Securities, joined CNBC Africa to delve into the economic expectations from both the Ghanaian and Nigerian administrations. President Akufo-Addo emphasized the importance of closing the IMF deal by March-end. The successful domestic debt exchange demonstrated positive participation rates from investors. Talks with China and the Paris Club Fund are ongoing, with expectations for agreements soon. The optimism surrounding foreign investor engagement remains high, potentially leading to a shift in the majority of funds to foreign investors. However, while the March 31st deadline appears slightly optimistic, monitoring developments remains crucial to gauge the deal's progress. The $3 billion IMF loan is pivotal for Ghana's economic stability, with plans set to enhance debt sustainability and streamline public expenditure. Despite falling foreign exchange reserves and currency depreciation, the deal could attract foreign investment and drive growth. Adhering to IMF recommendations is vital to boosting investor confidence and attracting offshore investments. Ghana aims to significantly reduce debt-to-GDP and debt-service-to-revenue ratios in the coming years, setting ambitious targets that hinge on successful restructuring and favorable conditions for investors. The fiscal authorities aim to slash Ghana's debt-to-GDP ratio from 103% in 2022 to 55% by 2028, alongside reducing the debt-service-to-revenue ratio from 29% to 18% by the same year. AbdulAzeez highlighted the necessity of successful restructuring, focusing on the burden sharing between domestic and foreign investors. While the achievement of these targets rests on favorable conditions for all investors, there is a cautious optimism regarding the feasibility of these ambitious goals. In conclusion, Ghana's pursuit of the IMF bailout signals a crucial turning point in its economic trajectory, with hopes of stabilizing the currency and enhancing investor sentiment. The success of the deal hinges on aligning with IMF conditions, attracting foreign investments, and navigating debt restructuring effectively. The coming months will be instrumental in determining Ghana's progress towards economic sustainability and growth.