The $300 million World Bank funding earmarked for various projects in 2024 has been successfully deposited into the Bank of Ghana’s (BoG) account.

This transfer follows Ghana's fulfillment of all prerequisites, including approval from both Cabinet and Parliament, facilitating the release of the funds to the nation.

As of this morning, March 27, 2024, Joy Business reports that the transfer has been completed. The BoG is now tasked with converting the funds into cedi and distributing the equivalent amount to relevant government agencies and ministries.

The "Foreign Exchange" portion of this funding could significantly bolster the Bank of Ghana's international reserves. Recent data from the Bank of Ghana indicates that its Gross International Reserves surpassed $6 billion as of February 2024.

During a recent media engagement, Finance Minister Dr. Mohammed Amin Adam stated that the government anticipates receiving approximately $1.2 billion from various development partners by the year's end.

Impact on Economy

This disbursement will accelerate the progress of several infrastructure projects outlined in the 2023 Budget that were previously delayed due to the late arrival of financial support from Ghana’s donors.

The World Bank was initially scheduled to disburse this funding late last year. However, delays in Ghana's negotiations with bilateral creditors impacted the approval of the $300 million loan.

These inflows are anticipated to mitigate the depreciation of the cedi. This is because they may signal to the international market that the Central Bank is now better equipped to stabilize the local currency.

Focus of this facility

The disbursement of this $300 million Development Policy Financing, the first in a series of three is for crisis response and resilience in Ghana. Its objectives are to:

1) Restore fiscal sustainability;

2) Support financial sector stability and private sector development;

3) Improve energy sector financial discipline; and

4) Strengthen social and climate resilience.

It is expected to strengthen domestic revenue mobilisation, control expenditures, safeguarding financial sector stability, removing barriers to private investment, setting the energy sector on a sounder financial and operational footing, strengthening the country’s social protection system, and mainstreaming climate adaptation and mitigation across policies.

Background

This funding is a portion of the overall financial assistance Ghana received through the IMF program established in May 2023. To date, the IMF has provided Ghana with approximately $1.2 billion under the program.

The World Bank describes the First Resilient Recovery Development Policy Financing as a crucial contribution from its International Development Association. This support aims to facilitate Ghana's economic recovery and promote resilient and inclusive growth.

In January 2024, the World Bank approved this initiative following an agreement in principle by the Official Creditors’ Committee under the G20 Common Framework regarding key parameters for Ghana's proposed debt restructuring.

This agreement, aligned with the Joint World Bank-International Monetary Fund Debt Sustainability Framework, marks a significant step toward restoring Ghana's debt sustainability.