Ghana is to begin talks with the IMF to support a government economic program, reversing a policy decision not to seek assistance from the multilateral lender.
President Nana Akufo-Addo authorized Finance Minister Ken Ofori-Atta to start “formal engagements” after a phone conversation with IMF Managing Director Kristalina Georgieva.
Ghana’s eurobonds surged after the announcement, with the benchmark 2027 securities jumping 13% to 64.779 cents in the dollar by 4:43 p.m. in London.
Ghanaian notes have been trading at distressed levels amid concern the government won’t be able to refinance foreign debt after the pandemic and the war in Ukraine sent borrowing costs soaring.
Ghana has been struggling to stabilize debt that has grown to 78% of gross domestic product at the end of March from 62.5% five years ago, because of a sweeping clean-up of the banking sector, energy-sector loans and the impact of the coronavirus pandemic.
Africa’s second-biggest cocoa and gold producer has increased its key interest rate by 450 basis points this year, the second-largest margin on the continent, to stem a sell-off of government bonds and contain price pressures.
Inflation accelerated to a more than 18-year high of 27.6% in May and Ghana’s cedi is the worst-performing African currency, weakening 22.6% since the beginning of the year.
Akufo-Addo’s government has repeatedly said it would not seek a monetary program from the IMF. A deal would be Ghana’s 17th IMF program since independence in 1957.