IMF reaches staff-level agreement on 4th review of ECF with Ghana

Ghana has reached a significant milestone with the International Monetary Fund (IMF) as they have achieved a staff-level agreement on the fourth review of Ghana's economic program under the Extended Credit Facility arrangement. This agreement, once approved by the IMF Executive Board, will provide Ghana access to approximately 370 million U.S. dollars. With this disbursement, Ghana's total funds received under the program since May 2023 will reach about 2.36 billion dollars. In addition to this economic development, Ghana has made a bold move by ordering all foreign entities to exit the country's local gold trading market by the end of the month. To delve deeper into these pivotal events, Karen Kwarteng, the Head of Global Market Sales at Standard Bank Ghana, shared insights during a CNBC Africa interview. Let's explore the key points discussed in the interview and the implications of these decisions on Ghana's economic landscape. The discussion started by examining Ghana's performance under the IMF program. Kwarteng highlighted the country's progress towards economic stabilization. The recent two-week review focused on Ghana's fiscal performance in 2024, with authorities evaluating key program indicators. While acknowledging some fiscal slippages and concerns about inflation exceeding targets, Kwarteng expressed optimism about Ghana's commitment to meeting fiscal surplus goals. She lauded the government's initiatives, such as the Transformation Tax Amendment Bill and reforms in the public procurement process, as steps towards maintaining fiscal discipline. Moving on to the gold sector, the conversation shifted to Ghana's establishment of the Gold Board, a critical development for the industry. The newly formed Gold Board is now the sole buyer, seller, assayer, and exporter of artisanal and small-scale mining gold in the country. This initiative aims to enhance oversight, regulation, and transparency in the sector. Notably, the Board's decision to exclude foreigners from the local gold buying market aligns with efforts to combat illegal mining and ensure Ghana maximizes the benefits of its gold resources. Furthermore, Ghana's gold production data for 2024 revealed the sector's significance, with the majority of output coming from small-scale mining. The Gold Board's role in overseeing policies and licensing underscores its importance in driving sustainable sector growth. Lastly, the discussion turned to Ghana's currency, the CD, and its performance against the dollar. Despite a 5% depreciation in the first quarter, interventions by the Bank of Ghana helped stabilize the CD around 15.5 levels. The upcoming auction of $120 million to bulk oil distribution companies in the second quarter indicates ongoing efforts to support the currency. Kwarteng emphasized the central bank's robust reserves, which stood at $9.4 billion, ensuring adequate import cover for the country. Overall, the interview provided valuable insights into Ghana's economic outlook, highlighting the importance of prudent fiscal management, sustainable resource utilization, and currency stability for long-term growth.