The International Monetary Fund (IMF) confirmed on Sunday that a staff team will visit Ghana this week to continue discussions with the authorities on policies and reforms that could be supported by an IMF lending arrangement.
Ghana turned to the IMF for help in July as its balance of payments deteriorated and hundreds took to the streets to protest against economic hardship. An IMF staff team briefly visited the country two weeks later.
The IMF, in a statement on Sunday, said the team led by Stéphane Roudet would arrive on Monday and stay until October 7. The team will also further engage with other stakeholders including the Bank of Ghana, parliament, business associations and civil society groups during the visit.
The government of Ghana, a major gold and cocoa producer, has been struggling to tame galloping inflation, reduce public debt and shore up the local currency. Its balance-of-payments deficit grew to nearly $2.5bn by the end of June from about $935m in March.
A source said last month that an agreement between Ghana and the IMF will probably consist of $3bn in financing over three years, and contain elements of both extended credit facility and extended fund facility programmes.
Ghana’s central bank said has rescheduled its upcoming interest rate decision to October 7 from September 26 to coincide with the end of the IMF team’s visit. The central bank raised its main lending rate by 300 basis points to 22% last month.
Bloomberg reported on Friday that credit ratings agency Fitch Ratings cut Ghana’s score to two notches above default, citing the increased probability of a debt restructuring amid mounting financial stress.
The West African nation’s long-term local and foreign currency ratings were cut by two levels to CC from CCC on concern an IMF deal would require some form of debt treatment due to rising interest costs and weak fiscal revenue, the agency said.
“This will be in the form of a debt exchange and will qualify as a distressed debt exchange under our criteria,” Fitch analysts wrote.
Ghana is poised to start talks with domestic bondholders on a restructuring of its local-currency debt as part of the nation’s plan to secure a $3bn loan from the IMF, Bloomberg reported earlier last week.
Reuters
