Ghana is likely to receive as much as $3 billion over three years from the International Monetary Fund (IMF). This was double the amount of $1.5 billion requested a month ago.
The funds will also unlock budget support from other multilateral lenders
The IMF conducted debt sustainability analysis of Ghana’s finances in 2021 and found it to have a high risk of debt distress and vulnerable to shocks from market access and high debt servicing costs.
It estimates that the country faces $2.75 billion of external debt servicing in 2022, including amortisation and interest, and $2.8 billion in 2023.
Access to external financing will remain tight, as Ghana is likely to remain locked out of Eurobond markets, which have come to be a regular source of external financing for the government.
Ghana is expected to meet its external debt obligations, in part, through a combination of a $750 million term loan from the African Export-Import Bank, $250 million in syndicated loans from international commercial banks, and up to $200 million from the government’s sinking fund this year.
Per the 2022 mid-year policy review, the government is expected to source the rest from the IMF and other multilateral lenders.
In the absence of an approved programme by the end of the year, the government would have to draw more heavily on its international reserves, which were USD7.6 billion, including oil funds and encumbered assets, as of June 2022.
On the domestic debt front, the government’s interest costs reached 47.5% of revenue in 2021, considerably above the current ‘B’ median of 10.7%.
The government has increased its outstanding advances with the Bank of Ghana (BoG), providing some additional domestic financing and could conduct another private debt placement with the central bank as it did in 2020, but such a measure would necessitate parliamentary approval.