A $3 billion, three-year loan package for Ghana was approved by the executive board of the International Monetary Fund (IMF) on Wednesday.
Allowing for an immediate payout of about $600 million and possibly offering a way out of the worst economic crisis Ghana has seen in a generation.
The IMF stated in a statement that achieving prompt debt restructuring agreements with external creditors would be vital.
While the Extended Credit Facility loan is intended to help Ghana address immediate policy and funding issues.
The Fund added that the new loan would establish a framework for finishing its debt restructuring and would help in obtaining further outside funding from development partners.
However, IMF Managing Director, Kristalina Georgieva in a video released on Twitter, congratulated Ghana for implementing actions to revitalise and reduce the nation’s debt.
G20 debt relief framework for developing nations makes progress with Ghana debt restructuring promise, according to Georgieva.
Recall that Ghana has been seeking for a $3 billion dollar relief fund from International Monetary Fund (IMF) since, 2022.
However, IMF withheld the loan until Ghana presented sustainable debt restructuring plan, this which has hampered Ghana’s attempt to recover from economic crises.
While Cedi, the country’s currency had a drop in value as it experienced the worst performing currency of any country in the world.
Meanwhile, the public opposed $3 billion IMF loan, but government insisted it would help.
Futhermore, Ghana plans to restructure its debt by reducing external debt service by $10.5 billion from 2023 to 2026.
The fund says Ghana’s debt is unsustainable and the country wants to reduce its risk of financial strain to a moderate level by 2028.
Prior to this year, it completed an internal debt exchange, and as part of the Group of 20’s Common Framework initiative, it is now demanding relief from its international debt.
Also, The IMF predicts that Ghana will have a $15 billion funding imbalance in its balance of payments from 2023 to 2026.
The World Bank will provide $1.6 billion in budget and balance-of-payments support, but Ghana must still work to lower its public debt-to-GDP ratio from 88.1% to 55% by 2028.