Monday marked the official start of negotiations between Ghana and the International Monetary Fund (IMF) for an economic program that is required to prevent a debt default and stabilize the economy in the short- to medium-term.

It came after an IMF mission, led by Stéphane Roudet, the Mission Chief to Ghana, arrived in Accra over the weekend.

According to an IMF release, the team will remain in the nation from now and October 7, 2022.

The negotiatons with the government team are meant to determine the form that an economic stabilisation programme, which will be Ghana’s 17th with the fund since 1957, should take and when it can kick off.

It would also explore the nature of the policies, reforms and programmes that the loan support should entail.

Challenges

The negotiations come at a time when the economy is facing one of its worse challenges in recent times.

On Friday, Fitch Ratings downgraded the economy to CC from CCC, which is the country’s worst rating ever.

Read also: Fitch downgrades Ghana to CC from CCC

The agency said the downgrade followed “increased likelihood that Ghana will pursue a debt restructuring given mounting financing stress.”

Request

The government approached the fund for support in July this year after mounting debts in the midst of weak revenues fueled large fiscal deficit, rising inflation, a weakening currency and a general hike in cost of living.

Following the approach, a fact-finding team from the IMF arrived in July 2022 for discussions with the government after which it called for a debt sustainability analysis (DSA).

Although the results of the analysis are yet to be known, Graphic Online understands that the fund has asked the government to consider a debt restructuring with its creditors to help bring the debt to sustainable levels, necessary for a fund programme to begin.

The results of the negotiations will form the basis for a staff decision on Ghana’s request, which will then be submitted to the IMF executive Board for consideration.

According to the Finance Minister, Ken Ofori-Atta, President Nana Addo Dankwa Akufo-Addo wants a deal concluded by December 2022 to allow for a quicken recovery of the economy.

Duration

Discussions and negotiations for the country’s most recent programme in 2015 took around seven months to conclude.

Meanwhile, Graphic Online was earlier informed that the country could get up to $3 billion to stabilise its reserves and also open up access to the international capital market for lending.

The country was shut out of the market this year over the high debts.