• Monday, June 17, 2024
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IMF deal helping Ghana reposition its economy, President says

IMF deal helping Ghana reposition its economy, President says

A $3 billion funding package that Ghana secured from the International Monetary Fund this month will provide a foundation for repositioning the economy and enable the authorities to better control inflation and interest rates, President Nana Akufo-Addo has said.

According to him, discipline will be exercised in implementing the deal with the IMF and efforts will be made to ramp up domestic savings, controlling public expenditure and giving impetus to private-sector investment.

Akufo-Addo spoke Wednesday in an interview at the Qatar Economic Forum in Doha on Wednesday.

Ghana is world’s second-biggest cocoa producer and wants to begin producing its own chocolate to derive more revenue from the industry, but the process is a “daunting” one, according to the president.

The government is confident of meeting new European Union standards for cocoa exports, and is working on penetrating new markets for its crop in Asia and other regions, he said.

Last week, Ghana’s central bank paused its steepest phase of monetary tightening, after clinching the $3 billion lifeboat from the IMF, and Ghana now expects the downward trend in inflation to continue.

The monetary policy committee maintained the policy rate at 29.5%, Governor Ernest Addison told reporters last Monday in the capital, Accra. Eight out of 10 economists in a Bloomberg survey correctly predicted the decision.

The cedi was little changed after the announcement to trade at 10.7397 against the dollar at 12:40 p.m. in Accra. The nation’s dollar bond maturing in 2032 fell 0.3 cents to 38 cents on the dollar.

Tight monetary policy, relative stability in the local currency and following conditions attached to the IMF deal will allow for a faster easing in inflation toward the target band, the governor said.

Read also: IMF approves $3 billion bailout for Ghana to revive economy

The annual inflation rate which hit 54.1% in December, a level last seen in the early 2000s, ebbed for a fourth straight month in April to 41.2%. It is now four times the ceiling of the central bank target range of 6% to 10%.

The MPC has increased the key interest rate by 16 percentage points since November 2021 to contain inflation and steady the currency’s 43% decline against the dollar that was stoked by the nation’s worsening financial conditions and ballooning debt.

The country suspended payments on most of its external debt in December. The government plans to sign a memorandum of understanding on restructuring its loans with official creditors by June or July, the Finance Ministry said last month.