Ghana to make U-turn and ask IMF for help for its economy | International Monetary Fund News


Till now, Ghana had refused to hunt IMF assist to rescue an financial system crippled by the pandemic, rampant inflation and a depreciating foreign money.

Ghana, one in every of West Africa’s largest economies, will maintain formal talks with the Worldwide Financial Fund (IMF) on a assist bundle, the federal government has stated, solely days after lots of took to the streets protesting mounting hardship.

The cupboard gave its assist for the choice at a gathering on Thursday, following a cellphone dialog between President Nana Akufo-Addo and IMF Managing Director Kristalina Georgieva.

Till now, Ghana, the continent’s second-biggest gold producer, had refused to hunt IMF assist to rescue an financial system crippled by the pandemic, rampant inflation and a depreciating foreign money, regardless of analysts warning it’s near a debt disaster.

The IMF didn’t instantly reply to a request for remark.

Analysts stated the choice ought to assist Ghana cope with its challenges.

“Optimistic information – given the succession of exterior shocks, and the rising challenges for Ghana’s financial system,” tweeted Razia Khan, chief economist for Africa and the Center East at Customary Chartered.

“This determination was virtually inevitable, given the worsening financial scenario and the specter of a stability of funds disaster as a result of deteriorating exterior atmosphere,” stated Leslie Dwight Mensah, Economist and Analysis Fellow on the Institute for Fiscal Research in Accra.

“The primary achieve for Ghana shall be improved worldwide confidence within the nation’s capability and efforts to climate the disaster.”

Ghana’s dollar-denominated sovereign bonds rallied sharply with points up maturing in 2026 and 2027 leaping almost 5 cents within the greenback to commerce at their highest degree since Might.

Central financial institution governor Ernest Addison stated in Might that Ghana confronted an general stability of funds deficit of $934.5m within the first quarter of 2022, in contrast with $429.9m in the identical interval final yr.

Lots of took to the streets in Ghana’s capital Accra for 2 days this week to protest towards spiralling inflation and different woes. Development slowed to three.3 % year-on-year within the first quarter of 2022 and inflation hit a file of 27.6 % in Might.

The central financial institution raised its most important rate of interest by 200 foundation factors to 19 % final month, the second rise this yr to buttress macroeconomic stability.

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